Building societies are rejoicing as the positive inflow of savings evident at the end of 2007 has continued into the New Year, with January 2008 seeing the largest influx in more than a decade.
According to the Building Society Association (BSA), building societies experienced an influx of £597 million in January into their savings accounts
, the largest inflow in one month since 1997, and a large increase on January 2007's deposits which totalled just £196 million.
Commenting on the figures, Adrian Coles, Director General of the BSA said: "The high savings deposits in January represent another excellent month for building societies. The attractive savings products that societies are offering, coupled with the volatility of share prices, have attracted savers into societies, while the continuing economic uncertainty is encouraging further saving.
He continued to say that in light of Christmas bills being paid off in January when the first month of the year often experiences high net withdrawals, this year's influx seems particularly substantial. Leeds Building Society
has reported high inflows of deposits throughout 2007, despite a "background of unprecedented turbulence" in the financial markets. Savings at Leeds rose by a record £757 million to £6 billion last year, providing sufficient funding to cover 94 per cent of the building society's net lending for 2007, which was also up to a record £807 million.
In spite of market turmoil and the credit crunch squeezing household budgets, the quality of loans remained high, and those with three months of more of arrears remained at just 0.7 per cent, a rise of 0.1 per cent during the course of the whole year. This is partly as a result of the society having zero exposure to the sub prime mortgage crisis in America.
Chief Executive, Ian Ward, was exuberant about Leeds' performance, remarking that "The uncertainty in the markets underlines why building societies are so important." and that Leeds' "sustainable, successful business model produced a 10% increase in pre-tax profits, a 13% rise in assets" and its "strong balance sheet was underpinned by record levels of savings inflows."
"The majority of our net lending in 2007 came from our members savings" he said, "and, as a result, we are much less exposed to the liquidity issues in the market than many banks and other financial organisations."
© Fair Investment Company Ltd