Annual Financial Report

 MANCHESTER BUILDING SOCIETY

PRESS RELEASE

RESULTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2010

Main Elements of Performance

·; Profit after tax from continuing operations up by 7.2% to £0.49m

·; Society expense ratio reduced from 0.59% to 0.51%

·; Cautious reduction in group total assets by 4.6% to £894m

Michael Prior, Chairman of the Society, commented:

"During 2010, a conservative approach was taken to capital management, strengthening the Society through shrinkage of the balance sheet. As a consequence, the Society was able to increase its core tier 1 capital ratio from 8.6% to 9.2%. The steps taken in 2009 to reduce the Society's cost base by over 20% provided a material benefit to 2010's results, as did meticulous margin management seen throughout the year.

Focus remained on our core business activity of prime mortgage lending funded by our retail deposit base.

Underlying profitability improved progressively during 2010 and the Group's trading performance from its continuing activities during 2010 showed a small overall improvement on that of 2009, despite the difficulty experienced by retail funded institutions operating in a near-zero base rate environment.

Inevitably, the results of 2010 are overshadowed by the successful disposal of the Society's subsidiary, Whiteaway Laidlaw Bank Limited in January 2011, at a healthy profit, some four years after its initial acquisition. The disposal, which will be recorded in 2011's results, has already provided significant benefits to the Society through the boost to capital generated from the sale and from the streamlining of the Society's operations. The stronger capital base now leaves the Society with one of the highest overall solvency positions in the sector, well placed to return its operational volumes back towards pre-credit crunch levels."

-Ends-

contacts for further information:

Chris Gee

Finance Director, Manchester Building Society 0161 923 8000

Footnote to Editors:

·; Manchester Building Society is the UK's 16th largest building society.

·; Based in Manchester City Centre, the Society has over 40,000 investing members and 5,400 borrowing members.

·; The Society provides a range of individually underwritten residential owner occupied Fixed and Discounted Variable Rate mortgages.

·; Manchester Building Society regularly features in the "best buy" tables for its mortgage and retail savings products.

Final Results 2010

from continuing operations