Chelsea BS profit down 80%

by Gill Montia

Story link: Chelsea BS profit down 80%

Chelsea Building Society posted a profit of £7 million for 2008, down 80% on a year earlier (£35.1 million).

The mutual said it had an exposure of £55 million to two failed Icelandic banks and that a provision of £44.3 million has been set aside against the potential non-recovery of these monies.

It also wrote off £15.4 million in connection with its acquisition in February 2007 of BCS Loans, which specialises in arranging first and second charge mortgages.

The goodwill loss was attributed to “the severe contraction” of the markets in which the unit operates.

New lending fell to £723 million; down from £1.35 billion in 2007, however deposits grew by 13.7% last year, to £1.15 billion, with 79,000 new accounts opened.

Chief executive, Richard Hornbrook, says the society “expects the current difficult trading conditions to persist throughout 2009, with the demand for mortgage loans remaining low, funds from wholesale sources remaining scarce and competition for retail savings remaining fierce”.