Despite the continuing challenges of the pandemic, Darlington Building Society has had a record-breaking year. PETER BARRON talks to Chief Executive Andrew Craddock

Andrew Craddock can look back on an illustrious career that spans nearly 40 years and has seen him run operations across the UK – but there has never been a year like 2021.

Despite the Covid-19 pandemic continuing to cause global economic turmoil, Darlington Building Society has emerged with the best set of financial results in its 166-year history.

Not only that, but the Society was able to invest in modernising the business, recruit additional staff, give existing employees better terms and conditions, and continue to support its local communities.

Not surprisingly, it all led to a series of industry honours:

  • Building Society of the Year at the MoneyAge Awards
  • Building Society of the Year at the MoneyAge Mortgage Awards
  • Help To Buy ISA Provider of the Year at the MoneyAge Mortgage Awards
  • Best Self-Build Lender at the Build It Awards

In addition, the Society received a 97.1% customer satisfaction rating from Smart Money People that put it ahead of most other financial institutions.

To borrow a phrase from Frank Sinatra, it was a very good year. So, no wonder the Society’s Chief Executive can afford a smile of pride and satisfaction as he reflects on his eventful third year at the helm.

“The great thing about 2021 was not just one individual thing but the way we were able to balance the various elements of the operation,” says Andrew.

“To achieve record-breaking financial results while investing in new systems to improve the member experience, and to do it in a single year, amid the most challenging circumstances, is incredible.”

And the CEO is quick to pay tribute to the hard-work, flexibility, and resilience of his staff in making it happen.

“In many ways, 2021 was even harder than 2020 because no one expected the pandemic to drag on so long. A lot of staff found it really tough, and that’s what makes the performance of the business even more remarkable,” he adds. “I’m just incredibly proud and humbled by their tenacity.”

Ahead of its annual general meeting on April 25, the Society has posted a pre-tax profit of £3.2m – the highest since it was founded in 1856, and a significant uplift on the £0.7m achieved the previous year.

The balance sheet of £752m is also the highest ever and is ahead of the Society’s position before the global financial crisis in 2008.

“It’s fantastic to have both a robust balance sheet and strong profitability,” says Andrew, who attributes the record-breaking performance to two key factors:

  • The uncertainty and disruption of the first year of the pandemic in 2020.
  • A significant increase in lending, with more people helped onto the housing ladder and, consequently, more interest generated.

Andrew was also conscious of the low return experienced by savers over the last few years due to the low interest rate environment and high levels of liquidity across the market and was therefore delighted that when the Bank of England put up interest rates in December 2021, the board took the decision to increase the interest rates on all variable rate savings accounts by 0.15% – passing on the full benefit to its nearly 76,000 saving members.

The Society also held its mortgage Standard Variable Rate (SVR) in January, meaning that SVR mortgage members would not face monthly repayment increases.

“We were acutely aware that our members had been through tough times too, so we wanted to do as much as we could to support them,” says Andrew. “We’re hoping to be able to do more of that this year because interest rates are expected to go on rising.”

The Society also made a major investment in new technology to improve the member experience and enable seamless home-working for staff. Enhancements included a refreshed website, a more customer-friendly telephony system, new payment system, new mortgage sales and origination platform, and the IT infrastructure being migrated to the Cloud.

The number of members using the online banking system, Darlingtonline, rose to 6,481 from 4,982 the previous year. And the Darlington Mortgage Hub – a new broker platform to enable complex cases to be dealt with more efficiently – went live at the start of February 2022.

On top of all of that, the Society’s programme of updating its network of branches continued. Following branch refurbishments in Guisborough, Yarm, Barnard Castle and Northallerton, a new Redcar branch was opened in a more prominent High Street location in June, and a refurbishment of Stockton branch is the latest to be completed.

Branch opening hours were also reviewed, with the changes leading to nine new staff being appointed to help with customer service on Saturdays.

With many people reassessing their lives in the wake of Brexit and the pandemic, staff retention is an issue for businesses nationwide, so the Society has improved its employee terms, conditions and benefits.

“What’s been nice to see is the number of employees who left but are now coming back,” says Andrew.

The Society has also prioritised growing its own talent, with a commitment to an apprenticeship programme, and a raft of internal promotions.

And that strategy is clearly paying off, with the Society recently named as an outstanding employer to work for in the Best Companies accreditation scheme, based on staff feedback. To celebrate the Society maintaining its 2-star accreditation for the second consecutive year, all employees have been given two ‘birthday holidays’.

Meanwhile, a growing reputation on the national stage has led to the Society being one of a select number of lenders involved in the Government’s First Homes scheme, and it was also the first lender to offer mortgages in support of the Help To Build initiative, launched by Homes England.

The rising trend towards staycations also led to Darlington Intermediaries launching a new holiday let mortgage, available at up to 75% loan to value.

Throughout it all, the Society reinforced its commitment to share 5% of profits with local good causes – in fact it went even further than that annual pledge. A total of £88,000 – more than 5% from the previous year’s profit of £0.7m – was given out to 28 different organisations.

That included a donation to Darlington Credit Union, as part of a support package agreed with Darlington Borough Council, to steer people aware from the dangers of loan sharks.

Other grants included £15,000 to the Clervaux Trust, at Croft-on-Tees, to buy a shepherd’s hut classroom, and £11,000 to The Hope Foundation at Middlesbrough.

Andrew has personally visited some of the beneficiaries of the donations and says: “It’s fantastic to see the impact the Society’s money is making at the grass roots, and the record-breaking profit we made in 2021 means we’ll be able to do a lot more going forward.”

The Society has also announced a partnership with the Great North Air Ambulance Service (GNAAS), with £5 donated to the charity every time a new High 5 Saver account is opened.

So, the big question, is how on earth do you follow that? How do you compete with the best performance in the Society’s history?

“We don’t want the profit to rise again in 2022 because we want to go on providing value for money products and services to our members, and supporting the local community, as well as continuing to invest in the business, and putting money aside for a rainy day,” Andrew replies.

And he confesses to having some concerns about the year ahead, with the Bank of England warning of further increases in inflation, energy prices rocketing, and cost of living rises hitting many people hard.

“There are clouds on the horizon, so we’re looking at supporting existing borrowers to make sure they can keep up with repayments, while carefully assessing the affordability of new borrowers.”

This year will also see the Society increasing its focus on the environment, with a cross-functional Climate Change Working Group established. A new green savings account has a tree-planting feature to help reduce emissions, while a green mortgage – only available on homes with an energy performance certificate (EPC) rating of A1 to B3 – is aimed at encouraging people to consider the environmental impact of their homes.

“We want to do our bit to help the country to net zero, so we have to educate ourselves as well as our borrowers and savers,” says Andrew.

A proud, record-breaking year has come and gone – and Darlington Building Society is in excellent shape as its looks forward with optimism to a more sustainable future.