“Business as usual” at UK building societies
Building societies are getting back to “business as usual” and are now well-placed to benefit from an upturn in the economy and increasing demand for mortgages.
According to KPMG, most of the UK’s 46 societies saw healthy results in the 2012 financial year, with 35 growing their assets.
Across the sector, assets fell by £2.1 billion (to £313.3 billion) but solely because of a shake out by Nationwide, which nevertheless remains the UK’s biggest society.
However, KPMG warns that one long-term shadow is cast over the sector in the form of increased capital requirements under Basel 3.
The firm’s financial services partner, Richard Gabbertas, comments: “If the leverage ratio moves from 3% to 4%, as seems possible, then the arithmetic would indicate that we’d see a contraction in balance sheets and more expensive mortgages.”