December 5 2013 Latest news:
By shaun lowthorpe Business editor
Monday, September 10, 2012
Building societies could play a key role in banking by the end of the decade according to an influential report looking at the state of the mutual sector.
A new report from KPMG predicts that building societies are entering a renewed period of potential growth and success, which could lead to them fulfilling a new regional banking role by the end of the decade.
The 22nd annual Building Societies Database, which analyses the performance of the UK’s 47 building societies as at April 2012, highlights that the sector has remained resilient despite difficult market conditions, with 23 societies increasing their profit for the year. Last year’s merger of the Norwich and Peterborough with Yorkshire Building Society means that the overall number of societies is now 47.
But the report said that their total group assets have grown to £315.4bn, compared to £306.2bn in 2011’s analysis. This increase of £9.2bn reverses the prior two year’s contraction of £13.3bn.
Richard Gabbertas, financial services partner at KPMG, said: “I expect building societies to play a big role in the future of banking in Britain. In many respects it is their time to shine. By 2020 we could see building societies fulfilling a new role as regional banks, capitalising on their attractiveness to smaller businesses and to customers who value their service proposition. They will be able to look to supplement their range of straightforward savings and mortgage products with current accounts for personal and small business customers alike.
“Building societies are largely unencumbered by legacy problems, whether portfolios of bad loans or regulatory issues, and the fact that their products are primarily simple and transparent point to the future success of the sector.”
Alice Leslie, public affairs manager for the Yorkshire Building Society Group, including Norwich and Peterborough, said: “It is very difficult to predict with certainty how the industry will look in a decade’s time but our core aims – of helping people own the property they want and saving with confidence for the future – will remain at the heart of what we do.
“Regardless of any opportunities which may arise in the coming years, we will ensure any services we provide do not undermine what makes us so valued – the trust our members show in us earned by being a prudent mutual run for their benefit, not shareholders.”