Coventry Building Society makes mortgage headway to give record results

Coventry Building Society today put in a sparkling case for the superiority of mutuals over some other lenders as it reported record first-half results.

The country's third-largest building society, which is about to complete its merger with Stroud & Swindon, saw a surge in its share of the mortgage market as many of its rivals simply shut up shop on issuing new loans.

In the six months to June Coventry's share of all net lending surged a staggering 31%, up from 8% for the whole of 2009.

But chief executive David Stewart pointed to its share of all gross lending, which at 2½%, is around double its normal market share.

"We have been able to do this because Coventry has a very simple business model which equipped us to cope with events of the past three years," he said.

"In particular we have remained very much open for business, lending at modest loan-to-value ratios and to low-risk borrowers. The increase in margins available for new mortgages means that our ability to continue to lend has supported profitability."

Underlying profit rose 40% to £46.5 million while pre-tax profits were 20% higher at £43.5 million. Bad debt writedowns fell from £7.9 million to £6.8 million.

Stewart said: "The society's performance is strong and we retain the flexibility to adjust margins, should the operating environment deteriorate further."