By Greg Wright

Published 2nd Mar 2023, 11:44 GMT

Updated 2nd Mar 2023, 11:45 GMT

The building society’s interim CEO described the “really unsettling” impact former Chancellor Kwasi Kwarteng’s mini-Budget had on some of the mutual’s customers. Alasdair Lenman said that, despite the unstable political context and the war in Ukraine, the mutual was able to grow its membership by 100,000 people last year and achieve a record customer satisfaction rating. Last year’s statutory profit before tax was £502.5m, which is an increase on the £320.0m recorded the year before. Mr Lenman said the moment the Bank of England increased interest rates in the autumn to reduce demand in the economy following the mini-budget was a "day I don't think any of us will ever forget".

He told The Yorkshire Post: "The financial markets didn't know how to cope with that level of inconsistency between monetary policy and fiscal policy. It was a really difficult time for so many customers. They found it really unsettling, a lot of people were phoning us up asking: '"What does this mean for me?"

Commenting on the aftermath of the mini-Budget, he said: "When you get that kind of turmoil in the financial markets, what it means to me is elevated risk. There was a real concern that if any of the big players had pulled out of the mortgage market we ran the risk of facing a huge mortgage demand that was not sustainable.

Alasdair Lenman, Interim Chief Executive of Yorkshire Building Society, said: “During what proved once more to be a difficult year for many, our focus on supporting members, customers, communities and colleagues highlighted the best of our Society, which once again delivered a strong set of financial results that we are very proud of." Picture: Mark Bickerdike

"You can't sell mortgages if you don't hedge interest rate risk. We withdrew from the mortgage market for two weeks and said we would go back in when demand was predictable and financial markets were liquid. Once that was achieved we went back in again. For us to withdraw from the mortgage market for two weeks cut us to the core. We didn't take a hit (from withdrawing from the mortgage market for two weeks) but we did a bit less lending.”

Mr Kwarteng’s £45bn package of unfunded tax reductions, the largest seen for half a century, panicked the markets and sent sterling tumbling, while also pushing up mortgage rates. Mr Kwarteng was sacked soon afterwards, with Liz Truss exiting Downing Street only six days later.

Mr Lenman, said: “During what proved once more to be a difficult year for many, our focus on supporting members, customers, communities and colleagues highlighted the best of our society, which once again delivered a strong set of financial results that we are very proud of. Our appetite to help people have a place to call home further strengthened our mortgage book too and despite the absence of any government initiatives seen previously and the turmoil that followed the mini-Budget, we saw record mortgage applications in May with overall mortgage balances increasing to £43.7bn during the year.”

The society, which has nearly three million customers, also welcomed its new chief executive, Susan Allen OBE, on the day of the results. Mr Lenman will remain at the mutual as chief financial officer.

Mini-budget turmoil was 'really unsettling' for customers, says interim CEO of Yorkshire Building Society