Skipton, the UK’s fourth biggest building society with more than a million customers, had a storming first half. Pre-tax profits surged from £34.4 million to £159.2 million as money set aside for bad debts was no longer needed and the housing market boomed.
No johnny-come-lately, Skipton has owned its own estate agent Connells for 25 years and this year paid £134 million for troubled rival Countrywide. That made it the country’s largest home seller with more than 1200 branches.
Profits at Connells (including four months of owning Countywide) jumped from £17.2 million to £80.2 million. This was obviously helped by the stamp duty holiday but there is more to come as Countrywide is integrated into the existing business.
Connells’ management enjoys great autonomy within Skipton but also knows it has to perform.
Being a mutual means the business can take its time to change and also do it away from the scrutiny which Countrywide suffered under as a public company.
David Cutter, Skipton’s chief executive, cautions that the “significant upturn in the economic outlook” has cheered both home buyers and lenders which has attracted more competitors into the housing market. Margins (with or without inflation) will come under pressure. The “hectic” market of the first half cannot last and will level off in the second half.
But Cutter believes the pandemic has brought about permanent change to the housing market with people reluctant to commute as far and as frequently and wanting more space in which to live. That will ensure plenty of homes are still bought and sold.
In the battle for all that new business is it the fintech mortgage business set up yesterday or the mutually-owned building society which has been around for 176 years which succeeds? Answers on a postcard, please.