Final Results

West Bromwich Building Society

Preliminary results announcement for the year ended 31 March 2015

Forward Looking Statements

Statements in this document are forward looking with respect to plans, goals and expectations relating to the future financial position, business performance and results of the West Brom. Although the West Brom believes that the expectations reflected in these forward looking statements are reasonable, we can give no assurance that these expectations will prove to be an accurate reflection of actual results. By their nature, all forward looking statements involve risk and uncertainty because they relate to future events and circumstances that are beyond the control of the West Brom including, amongst other things, UK domestic and global economic and business conditions, market related risks such as fluctuation in interest rates and exchange rates, inflation/deflation, the impact of competition, changes in customer preferences, risks concerning borrower credit quality, delays in implementing proposals, the timing, impact and other uncertainties of future acquisitions or other combinations within relevant industries, the policies and actions of regulatory authorities, the impact of tax or other legislation and other regulations in the jurisdictions in which the West Brom operates. As a result, the West Brom's actual future financial condition, business performance and results may differ materially from the plans, goals and expectations expressed or implied in these forward looking statements. Due to such risks and uncertainties the West Brom cautions readers not to place undue reliance on such forward looking statements. We undertake no obligation to update any forward looking statements whether as a result of new information, future events or otherwise.

WEST BROMWICH BUILDING SOCIETY

Preliminary results announcement

for the year ended 31 March 2015

The West Brom today announces its results for the financial year ended 31 March 2015, reporting substantial growth in residential mortgage lending and pre-tax profits of £12.4m.

Key highlights include:

- Gross residential mortgage lending of £446m, which is more than double the amount of lending carried out in our last financial year (2013/14: £214m)

- Significantly increased pre-tax profits of £12.4m (2013/14: £2.1m)

- A rise in the net interest margin to 1.15% (2013/14: 0.81%)

- An increase in the Group's strong Common Equity Tier 1 capital ratio to 14.4% (2013/14: 13.4%)

- Plans progressing for a move to new, purpose-built head office premises in West Bromwich later in the year

- We achieved the Investors in People Gold Award in recognition of our commitment to people development.

Jonathan Westhoff, Chief Executive, commented:

It is very pleasing to report further progress in the West Brom's performance. After returning to profit last year for the first time since the financial crisis, we have built on this achievement and significantly increased pre-tax profits to £12.4m.

We continue to reduce the impact of legacy issues such as commercial lending, while generating substantial volumes of new business, particularly in response to demand for residential mortgages to support homebuyers.

Growing consumer confidence and economic stability has created a perfect backdrop for us to bolster our residential mortgage lending. Indeed volumes of gross lending for home ownership are more than double what we delivered in 2013/14.

We have been active in assisting borrowers in our regional heartland fulfil their aspirations for buying their own homes, and strong relationships with our intermediary partners also gives us national reach elsewhere in England and Wales.

The West Brom also remains a safe home for members' savings and we have striven to maintain a competitive position in the rates of interest we can offer.

During the year we consolidated and simplified our portfolio of savings products, making it easier for members to track their money, and boosted rates for those with funds in our lowest paying accounts. We support the new initiatives announced by the government such as Help to Buy and fully flexible ISAs and we expect that these will be made available once full details are confirmed.

The transition of the Society over the last five years, away from its historic diversification into non-core activities and back to a building society focused on the fundamental needs of its members, is very satisfying.

Looking ahead we are optimistic about our future prospects, buoyed by growth in residential lending and a planned move to new, purpose-built head office premises in our home town of West Bromwich. Due for completion later this year, the facility at Providence Place will accurately reflect our position as the region's leading building society and a major local employer.

ENQUIRIES:

The West Brom 0121 500 7785

Mark Gibbard

Group Finance & Operations Director

Chief Executive's Review

Performance

I am very pleased to report we have built on the improved performance seen in the previous year, with a significant increase in pre-tax profit. We have continued to deliver on the objectives set in our strategy of realigning the business to return to the traditional building society model. The UK's strengthening economy has inspired consumer confidence and resulted in increased demand in the housing market. We are delighted that we have been able to support our members' home ownership aspirations and can report a more than doubling of our gross lending on residential mortgages.

Profit before tax improved from £2.1m to £12.4m. The main driver for this is a rise in the net interest margin from 0.81% to 1.15%.

The result for the year includes a £5.5m gain (2013/14: £5.1m gain) on the revaluation of the West Bromwich Homes investment property portfolio as a result of the house price increases we have seen in the year.

The Society's return to the residential lending market gained momentum with gross lending more than doubling to £446m (2013/14: £214m). Within this, 21% supported first time buyers.

Exposure to non-core commercial lending has continued to reduce. Since the Society exited the market in 2008/9, total exposure has reduced from £1.7bn to £0.8bn, of which £0.13bn is securitised.

The level of accounts in arrears by three months or more in our core residential mortgage book has remained low at 1.34%, in line with the sector average.

The return to profit, and the substitution of prime, residential lending for the higher risk legacy assets has resulted in the continued strengthening of the Society's capital position. The Common Equity Tier 1 capital ratio, benefiting also from capital treatments effective from 1st January 2015, under European regulations, increased to 14.4% (2013/14: 13.4%).

Strategic investment

Later this year the Society's Head Office will relocate to Providence Place in West Bromwich. This modern, environmentally friendly and functional workplace together with our continued investment in our core infrastructure and mortgage system, will ensure the business can grow, and is equipped with all the facilities needed to provide the efficient, friendly and professional service our members expect.

Members and mutuality

The Board remains committed to the core building society principles. As a mutual organisation the delivery and preservation of member value underpins all decisions.

Being guided by this model of a traditional building society, the West Brom looks after the interests of its members by offering prime residential mortgages, retail savings and investments which meet their specific needs.

In 2014 I reported that the rates on certain buy to let loans were increased, within the original terms and conditions of the mortgages. The increase was made to reflect changing market conditions and the need for the Society to carry out our business prudently, efficiently, competitively and in the best interests of all of our members. A number of borrowers formed an action group and challenged this in a legal case. I am pleased to say that the Court upheld the Society's position. Whilst the trial judge did not feel that there was any merit in an appeal, the action group wish to pursue one, and we await to hear when that might be.

As a demonstration of the Society's desire to support our borrowing members, during the course of the year, the Standard Variable Rate was reduced to 3.99%.

However, it has been another challenging year for savers with retail market rates falling. We continue to strive to balance the needs of our savings and mortgages members, and have tried to contain the reduction in rates, but we do have to respond to market pricing otherwise we generate retail savings inflows which we are unable to use given the level of demand for mortgages which is still at less than 60% of its 2007 peak. We did rationalise our savings product range in 2014/15 to offer a simple, clear range and whilst this did involve reducing the rates on some of our leading products more customers saw their rates increase than decrease.

Valuing members' views

Mutuality means that the Society is owned by and run for the benefit of its members, which is why finding out their views and opinions is of paramount importance.

I host Members' ViewPoint events in a variety of the Society's core locations, offering the opportunity for members to provide feedback on a range of subjects. These events offer valuable insight from our members and are used to help refine our products and services. In the financial year three events were held.

During 2014/15 we have continued to measure customer satisfaction. On average 9.4 out of 10 customers were satisfied with their experience when contacting the West Brom. When asked if they would recommend the West Brom to their family and friends, an impressive three quarters of customers confirmed that they would.

During the year we launched our Customer Panel where members are canvassed for their views on our products and services and give feedback on how we can improve the way we operate. This is done via short on-line surveys, and is open to any West Brom mortgage or savings customer aged 16 or over. Some 2,000 members have now joined this panel.

At the Society's Annual General Meeting (AGM), members can also voice their views, ask questions on key issues and vote on the election of the West Brom's Board of Directors and other resolutions.

Outlook

Reflecting on the materially increased profitability, strengthened capital position and improving economic environment, the West Brom can face the future with considerable optimism. Whilst there remain some legacy issues to resolve, which might result in some volatility in financial performance in future years, the trend remains very positive.

Residential mortgage activities are expected to increase in 2015/16 as the Society supports yet more members with their home ownership aspirations, all within a framework of responsible lending.

Going forward, the West Brom will continue its programme of strategic investment. Having completely renewed our branch network and lending capabilities, we look forward to unveiling the new Head Office later in the year.

Jonathan Westhoff

Chief Executive

27 May 2015