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		</div><p><a href="http://londonglossy.com/wp-content/uploads/2011/02/record-operating-profits-for-leeds.jpg"><img class="alignnone size-full" title="Leeds Building Society said it had operated a prudent approach to lending" src="http://londonglossy.com/wp-content/uploads/2011/02/min-record-operating-profits-for-leeds.jpg" alt="Leeds Building Society said it had operated a prudent approach to lending"/></a></p>
<p>Leeds Building Society has unveiled record operating profits and announced plans to increase its mortgage lending by 25% this year.</p>
<p>The UK&#8217;s fifth largest building society said it hoped to lend a total of £1.25 billion in 2011, after seeing its savings balances increase to a new high during the past 12 months. The group advanced £984 million in 2010, 7% up on the previous year.</p>
<p>It said it had continued to adopt a &#8220;prudent approach&#8221; to lending, with all residential mortgages backed by savers&#8217; deposits, while the average loan to value ratio on new loans was just 53%.</p>
<p>The mutual sector has complained of stiff competition for savers&#8217; money from the nationalised and part-nationalised banks and from Government-backed National Savings and Investments during the past couple of years.</p>
<p>But Leeds bucked the trend, growing its savings balances by £245 million during the year, to stand at a record £7 billion &#8211; more than twice the amount that would be expected for a building society of its size.</p>
<p>It credited some of its success on the savings front to the popularity of its fixed rate bonds, which, unlike most products on the market, allow customers unlimited access to a proportion of their money without penalty during the product&#8217;s term.</p>
<p>The lender also raised £250 million of long-term funding through a covered bond issue, the first money raised by a financial institution in the UK sterling covered bond market since June 2007, and the first group ever to use residential mortgages as a security. It also raised a further £250 million through the wholesale markets, meaning it has now secured the vast majority of the long-term funding it needs for 2011.</p>
<p>But the difficult economic conditions led to the group suffering losses of £44.2 million through defaults on residential and commercial lending, although this was down from £52.5 million in 2009. There was also a slight fall in the percentage of people who were in arrears of 2.5% or more of their outstanding mortgage debt, with this dropping to 2.16% from 2.24%.</p>
<p>The group said its funding position remained strong, with reserves of £505 million and a tier 1 capital ratio of 13.9% &#8211; significantly ahead of regulatory requirements.</p>
<p>It made an operating profit of £84.5 million, up from the previous year&#8217;s record of £80.1 million. Once impairment charges and provisions were taken into account, bottom line profits were £42.2 million, 33% more than in 2009.</p>
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