Business highlights:
- Total retail savings balances increased by £498 million to £10.06 billion
- Savings accounts increased by 38,000 to over 606,000
- Wholesale funding ratios have fallen from 30% to 20% reflecting reduced reliance on treasury markets
- Mortgage assets now wholly funded by retail savings (101% compared to 92% at 31 December 2008)
- New lending of £242 million focused on low risk (less than 75% loan to value business) residential lending supporting our commitment to return to the values of the traditional building society model
- Liquidity ratio of 25.2% maintained at similar levels to 31 December 2008 (26.8%)
- Administrative expenses decreased by 5.2% to £27 million (six months to 30 June 2008 £29 million). The group costs to mean assets ratio has improved to 0.44% (six months to 30 June 2008 0.49%)
- Early indications are that in the last two months the number of mortgage accounts in arrears is levelling off
- Operating profit before provisions and exceptional items of £18 million (six months to 30 June 2008 £30 million) due to lower net interest income
- Loss before tax of £26 million (six months to 30 June 2008 profit £23 million)
- Impairment on loans and advances of £53 million (6 months to 30 June 2008 £4 million), including a charge of £41 million related to mortgage fraud
- Exited Kaupthing Singer & Friedlander (Icelandic bank) position with a £9 million gain compared to year end provision
- Tier 1 capital ratio is 8.76% (31 December 2008 8.97%)
Stuart Bernau Chelsea’s chairman and interim chief executive comments:
"The Society has been through a difficult period and reporting a loss in the first half of the year is disappointing. However the underlying performance is strong even though we have had to make provision for impairment and fraud losses.
"In a competitive market, we have continued to attract strong retail inflows with our savings accounts increasing by over 38,000 in the first six months of the year, a testament to our strong and trusted brand. Our mortgage lending is now fully covered by our retail deposits and this has significantly reduced our reliance on wholesale markets.
"This is a good platform from which to build and we are concentrating on the society’s strengths by returning to its traditional values. We will continue to focus on providing excellent value and service to our members and Chelsea remains well placed to benefit from any recovery in the economy and housing market over the coming months."
