Annual report and accounts 2009 (PDF) - Coventry Building Society

More documents

Recommendations

Info

DIRECTORS’ REPORT(continued)GROUP ACCOUNTSThe Accounts show the consolidated Group results of theSociety and its subsidiaries, and the Society as a single entity.PENSION SCHEMEThe Society’s pension scheme had a surplus of £6.9 million atthe year end.PROFIT AND CAPITALThe Group’s profit after tax amounted to £43.5 million, whichwas added to reserves.The Group holds capital to protect its depositors, to coverinherent risks, to support the development of the businessand to provide a cushion for unexpected losses. In assessingthe adequacy of its capital, the Group considers its riskappetite and the material risks to which it is exposed. Capitaladequacy and capital resources are monitored on the basis ofthe framework developed by the Basel Committee on BankingSupervision and subsequently implemented in the UK by theUK regulator, FSA.Capital structurePrior to 1 January 2008, the Group followed the requirementsof the Capital Accord (Basel I). Since 1 January 2008 theGroup has complied with the EU Capital RequirementsDirective (Basel II). From this date FSA granted the Grouppermission to use the Basel II Internal Ratings Based (IRB)approach to credit risk and capital management. Thispermission reflects the Group’s detailed analysis of itscustomer base and control of its credit risk profile. It willallow the Group to set capital levels using internally developedmodels rather than through percentages set by FSA.The table below summarises the composition of regulatorycapital for the Group as at 31 December 2008 and 31December 2009. At 31 December 2009, and throughout theyear, the Group complied with the capital requirements thatwere in force. At 31 December 2009 the Group calculated itscapital requirement under Basel II using the IRB approach forprime residential and buy-to-let mortgage exposures, and thestandardised approach in calculating the capital requirementsfor other risk areas.2009 2008Notes £m £mTier 1General reserve 616.0 574.9Pension fund surplus adjustment (6.9) (8.9)Intangible assets (9.9) (8.5)Deductions from tier 1 capital 2 (19.2) (10.7)Core tier 1 capital 580.0 546.8Permanent interest bearing shares 1 160.0 160.0Total tier 1 capital 740.0 706.8Tier 2Collective provisions for impairment 3 0.3 0.8Subordinated debt 1 70.0 70.0Deductions from tier 2 capital 2 (19.2) (10.7)Total tier 2 capital 51.1 60.1Total capital 791.1 766.9Risk-weighted assets 2,078.5 2,043.7Core tier 1 ratio (%) 27.9 26.81. Principal amount outstanding only.2. Under Basel II a deduction is made for the excess of expected losses on loans and advances to customers, calculated on an IRB basis, over accountingprovisions.3. Under Basel II collective provisions for impairment relating to loans and advances to customers, calculated on a standardised basis, are included as tier 2capital.12Core tier 1 ratioThe Society retains a strong capital position with a core tier 1 ratio of 27.9% (2008 – 26.8%).
ASSETSThe assets of the Group increased by £1,038 million to£18,402 million at 31 December 2009, representing growth of6.0%.Changes in intangible assets and property, plant andequipment are detailed in notes 24 and 25 to the Accounts.Advances during the year amounted to £2.7 billion,contributing to total loan balances of £14.1 billion,representing growth of 6.8%. At 31 December 2009, therewere 174 mortgage accounts twelve months or more inarrears (2008 - 66). The balances on these accounts totalled£22.2 million (2008 - £6.8 million) and the value of thesearrears was £1.1 million (2008 - £0.5 million).CREDITOR PAYMENT POLICYThe Society’s policy is to agree the terms of payment at thestart of trading with the supplier and to pay in accordancewith its contractual and other legal obligations.CHARITABLE AND POLITICAL DONATIONSThe Society provided for donations of £1.4 million (2008 - £1.8million) to charitable organisations during the year. Thisincluded a provision for £1.3 million (2008 - £1.6 million) toThe Royal British Legion’s Poppy Appeal and £50,000 (2008 -£50,000) to the Coventry Building Society CharitableFoundation.The amount donated to The Royal British Legion PoppyAppeal was the result of an ongoing relationship with theLegion for which the Society has developed a portfolio ofproducts including fixed rate bonds and an easy accesssavings account. In February 2010, a cheque for £1.8 millionwas presented. This brings the total support given to thePoppy Appeal since the launch of the inaugural Poppy Bond inOctober 2008 to £3.4 million. The number of membersholding accounts which support the Legion now totals over54,000.No contributions were made for political purposes. However,as a result of the Political Parties, Elections and ReferendumsAct 2000, time allowed for employees to carry out civic dutiescan amount to a donation. The Society supports a very smallnumber of employees in this way.CORPORATE RESPONSIBILITY,ENVIRONMENTAL AND EMPLOYEE FACTORSStaffThe directors would like to recognise the contribution madeby every member of staff in meeting the expectations of theSociety’s membership. During the economic downturn and inparticular the uncertainty caused by ongoing shocks to thefinancial system, the need for staff to reassure members aswell as deal with their financial requirements has been anadditional priority.The performance of staff in this regard has been exemplary,supported by a commitment to open, timely and relevantcommunications across the Society.The emphasis on communication was just one aspect thatwas favourably reviewed by independent assessors for theInvestor in People award. This was re-awarded during 2009,and the directors were delighted that the Society was placedin the top 100 of the 20,000 organisations assessed.This award emphasises the Society’s commitment to its staff.In uncertain times, when many organisations have beenforced to make cutbacks with a corresponding loss of jobs,the directors are particularly pleased that Coventry continuesto grow, providing opportunities for both new and existingstaff.However, members of staff are under no illusion that theeconomic conditions are harsh and that the Society mustwork hard to prosper. Their flexibility and willingness to takeon additional responsibilities is a fundamental strength of theSociety and one that has been encouraged through trainingand development opportunities over a number of years. Thishas supported improvements in efficiency and costeffectivenesswhich has helped protect jobs in the currentdownturn.It was very encouraging that the Society should also berecognised in the Coventry and Warwickshire Employer ofChoice awards, being presented with the top award for itsemployee wellbeing programme and highly commended forthe overall employer of choice award. The Society willcontinue to invest to provide the right environment andopportunities for members of staff to meet their expectationsand those of the Society’s membership.13
Page 1 and 2: ANNUAL REPORT & ACCOUNTS 2009
Page 3: ChairmanDavid HardingDeputy Chairma
Page 11 and 12: DIRECTORS’ REPORTBUSINESS OBJECTI
Page 13: Financial performanceThe Society ac
Page 17 and 18: KEY PERFORMANCE INDICATORSNET MORTG
Page 19 and 20: Remuneration CommitteeConsisting of
Page 21 and 22: RISK MANAGEMENT REPORTPRINCIPAL RIS
Page 23 and 24: CORPORATE GOVERNANCEThe board is ac
Page 25 and 26: APPOINTMENTS TO THE BOARDThe appoin
Page 27 and 28: DIRECTORS’ REMUNERATION REPORTINT
Page 29 and 30: STATEMENT OF DIRECTORS’RESPONSIBI
Page 31 and 32: OPINIONIn our opinion:the Annual Ac
Page 33 and 34: BALANCE SHEETSas at 31 December 200
Page 35 and 36: CASH FLOW STATEMENTSfor the year en
Page 37 and 38: Improvements to IFRSThe improvement
Page 39 and 40: FINANCIAL LIABILITIESFinancial liab
Page 41 and 42: PENSION COSTSThe Society operates b
Page 43 and 44: Loan impairment and other provision
Page 45 and 46: 7. OTHER OPERATING INCOMEGroup Soci
Page 47 and 48: 11. DIRECTORS’ EMOLUMENTS (contin
Page 49 and 50: 12. PENSION SCHEME (continued)2009
Page 51 and 52: 13. IMPAIRMENT PROVISIONS ON LOANS
Page 53 and 54: 14. PROVISION FOR FSCS LEVIESAll de
Page 55 and 56: 20. DEBT SECURITIESGroup Society Gr
Page 57 and 58: 21. DERIVATIVES AND OTHER FINANCIAL
Page 59 and 60: 24. INTANGIBLE FIXED ASSETSGroup So
Page 61 and 62: 26. DEFERRED TAXDeferred tax assets
Page 63 and 64: 32. OTHER LIABILITIESGroup Society
Page 65 and 66:
38. FINANCIAL COMMITMENTSGroup Soci
Page 67 and 68:
40. FINANCIAL INSTRUMENTS (continue
Page 69 and 70:
Page 71 and 72:
Page 73 and 74:
Page 75 and 76:
41. RELATED PARTY TRANSACTIONSULTIM
Page 77 and 78:
42. NOTES TO THE CASH FLOW STATEMEN
Page 79 and 80:
2. OTHER PERCENTAGES2009 2008% %As
Page 81 and 82:
3. INFORMATION RELATING TO DIRECTOR
Page 84:
www.thecoventry.co.ukCoventry Build
show all

Annual report and accounts 2009 (PDF) - Coventry Building Society

You also want an ePaper? Increase the reach of your titles

Delete template?

Save as template?