Newbury Building Society MEMBERS’ REVIEW

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Building Society
Newbury Building Society

The Directors have pleasure in presenting the Members’ Review incorporating the Summary Financial Statement of the Society for the year ended 31 October 2021.


Our Performance Highlights


Chairman's Statement


Chief Executive's Review


Purpose and Values


Summary Financial Statement


Notes to the Summary Financial Statement


Independent Auditor’s Statement


The Board of Directors


Directors’ Attendance Record


Directors’ Remuneration Report


Notice of the 165th Annual General Meeting


Rule Change


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Mortgage balances

( £ million)

Savings balances






913 879

( £ million) 1,152
1,042 976

2017 2018 2019 2020 2021
We achieved gross lending of £214m to mortgage customers (2020: £181m)

Regulatory Capital
80.1 75.6 68.7

( £ million)
89.9 83.4

2017 2018 2019 2020 2021 We increased savings balances by £110m (2020: £66m)

Profit after tax

( £ million)




4.4 3.2

2017 2018 2019 2020 2021 Total capital ratio increased to 20.9% (2020: 19.4%)

Members 67,927 68,967 71,161

72,275 73,854

2017 2018 2019 2020 2021 Management expenses ratio of 0.94% (2020: 0.93%)

Mystery shopping scores






2017 2018 2019 2020 2021 Increased member numbers by 1,579 (2020: 1,114)

2017 2018 2019 2020 2021
Complaints as a percentage of members 0.07% (2020: 0.07%)

These measures are key performance indicators. For information on these measures please see page 18.

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Members will not be surprised to read that we endorsed the existing strategy, which is to help our members build sustainable futures by being the trusted provider of savings and mortgages in our communities.
Peter Brickley
Chairman of the Board

It is with a mixture of pride and relief that I can say that despite the ongoing impact of the Covid-19 pandemic, your Society delivered another successful year in 2021, with the highlight being the blend of strong balance sheet growth and profitability, something which has characterised so many of our recent performances.
The year started inconspicuously with the second national lockdown, our branches only open in the mornings and the majority of our Head Office staff working from home, even though our new building at 90 Bartholomew Street was ready for occupation. Indeed, staff worked from home throughout most of the year, only being able to return in August, when Covid-19 conditions finally eased enough to allow it. Although our people have worked tirelessly to make working from home successful, we have little doubt that bringing employees together in our office, at least for two or three days each week, produces a better working experience for them and a better customer experience for our members. Ultimately, time will tell whether working from home is a permanent feature of work life for those that can, but after 15 months of Board meetings held by video technology, I can readily state that it was an invigorating experience in July to have the whole board around the table in person for our annual strategy day! Our new head office prepares us for the future, whereas we would have had real trepidation returning to the cramped conditions of its predecessor.
The Board undertook a full review of our strategy during the year, culminating with an agreement for our future plans in July. Members will not be surprised to read that we endorsed the existing strategy, which is to help our members build sustainable futures by being the trusted provider of savings and mortgages in our communities. In order to deliver that core aim, we specifically agreed to focus on customer value over the long term, to develop and accelerate our digital transformation, to deliver steady growth, to look after our employees and to demonstrate a community conscience.

We try hard, but we are always pleased to hear your feedback, whether positive or otherwise.
The housing market has enjoyed an astonishingly strong year given the impact of Covid-19 on the wider economy. The stamp duty holiday for property purchases up to £500k was clearly a factor, and the unusually high level of completions in June and September (the months when that benefit respectively reduced and ended) evidenced its popularity with purchasers. The national market saw house prices rising by 10%+ during the year as demand for property exceeded supply, particularly in the suburban and rural markets. When coupled to the lowest interest rates since records began, and with salaries beginning to rise, affordability for house price increases was unusually favourable.
The result of this strong market was a record lending year for us. The lending achievement was aided by the large pipeline from the previous year which had been waiting to complete at year end in October 2020 but had been delayed by Covid-19. What is noticeable about this year’s performance is that enquiries and applications have both reduced in the final quarter as the housing market cools down in recognition of the potential impact of inflation and the likelihood of interest rate rises. Confidence is a fragile thing and although there has been a reduction in the forecast level of unemployment and an increase in the forecast for Gross Domestic Product, the outlook for the housing market nevertheless remains uncertain.
The savings market also proved to be stronger than we had anticipated, with the result that we had to restrict new account openings to local postcodes only. We also reduced savers interest rates modestly in April to reflect the changes being made by competitors and to help rebalance the demand for mortgages and savings. Despite the changes, savers balances increased by over £100m and with the Bank of England’s Term Funding Scheme (TFSME)

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also offering us the opportunity to generate low-cost funding, we ended the year with more liquidity than we would normally hold. This is planned to reduce to around 20% next year and to around 17% in the longer term.
Although there have been no new faces in the Boardroom this year, we did say farewell to two nonexecutive directors (NEDs) in October when Sarah Hordern and Zoe Shaw both resigned to pursue other business interests. There is no question that the time demand on non-executive directors has increased in recent years and this has been further exacerbated by Covid-19, so I thank Sarah for nearly seven years service and Zoe for nearly four years and for their valuable contributions to our progress during their time on the Board. I must add that throughout the Covid-19 period your Non-Executive Directors

have kept their remuneration flat, reflecting the uncertainties we were facing.
Just after year end, we appointed two new NEDs who joined our Board on 1 November, and they are up for election at the AGM in February. Nicola Bruce is a chartered management accountant with significant NED experience across private, public, mutual and charitable sectors and Fiona Phillips is a lawyer and General Counsel for the UK Infrastructure Bank, having recently returned from Hong Kong where she was global head of digital legal for HSBC. We are delighted to have secured their services and look forward to the benefit of their wisdom and experience moving forward. We value the diversity and experience that your Board represents.

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There will be two further changes to the membership of the Board in the first quarter of 2022. Firstly, as advised last year, I will be retiring following the AGM in February, having been a member of the Board for thirteen and a half years, the last seven as your chairman. I will be succeeded in the chair by Piers Williamson, who has been on the Board for four years and who will continue to lead the Society’s development in the best interests of saving and borrowing members alike. Members can be reassured by the fact that Piers is a treasury and housing expert, with significant experience in our key markets, something we have already benefitted from in his four years on the Board to date.
The second change is the retirement of our Chief Executive Roland Gardner in March 2022. Roland has worked for the Society for 35 years, the last 15 as Chief Executive. He is a larger than life character who is well known throughout the Newbury business community as well as the building society sector, and who has done so much for the Society both in terms of business development and strategic advancement during his career with us. After starting as the manager of Newbury Branch, he has subsequently contributed to and has overseen much of the change which has enabled us to become one of the strongest performing societies in our peer group. Roland deserves much credit for your Society’s achievements and receives our gratitude for his loyal service over such a long period. He will be missed, and we wish him all the best for a long and happy retirement.
I am though delighted to confirm that Phillippa Cardno, our Operations & Sales Director, will succeed Roland as CEO. Phillippa has worked for the Society for over 25 years and has been Roland’s key support in recent years, so it is completely fitting that she should take over the CEO role and lead the Society into the next phase of its evolution and growth.

Digital transformation in financial services is the key strategic area for the Board to oversee in the coming years and there is nobody better placed to lead that transformation than Phillippa, who has had responsibility for our Technology function for 15 years and understands the complexities involved as well as the differing technologies to deliver it. Phillippa is a mortgage professional with an in-depth knowledge and specialism in affordable housing, something which enables the Society to develop the niche mortgage products which deliver what borrowers need whilst giving benefit to the membership as a whole. I am confident Phillippa will lead the Society with distinction in her new role and congratulate on her well-deserved elevation to it.
It has been my privilege and pleasure to have participated in the development of your Society; a time when the Society has doubled in size, strengthened its capital base more than twofold and developed into a community based and service oriented financial services business in which I believe we can all be proud.
On 1st November we celebrated 165 years as the Newbury. Our first AGM was in November 1857, a couple of years before Charles Darwin published his controversial Origin of Species. Then it was reported our mortgage advances totalled £840, with 57 members and a profit of £14 10 shillings. A century and almost 2/3rds later, we have over £1 billion of mortgage assets, £88m of retained profit and about 74,000 members. We must remember that many have gone before us to build this Society, and that burden passes to our successors, in whom I am confident.
Peter Brickley, Chairman 20 December 2021

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The Society believes its purpose and role as a mutual is to lend to all types of aspiring homeowners.
Roland Gardner Chief Executive

From a business results and development perspective, this has been another eminently satisfactory year for the Society. Given the pervading Covid-19 backdrop, the progress made is most gratifying, both in terms of developing the Society for a more digital future, as well as in terms of delivering the quality of financial results which strengthen the Society’s capital base and grow the balance sheet. My executive team and indeed the whole staff of the Society have had to work hard to provide members with our usual standard of service, and despite the challenges of Covid-19, the regular feedback from you, collected independently by Smart Money People, suggests we have succeeded in doing so.
The Society’s strategic plans are underpinned by a digital agenda that is member-centric, service-driven, secure, and value-focused. Over the past year we have modernised and introduced many digital services, with an emphasis of moving from traditional on-premise systems to consuming high-quality cloud partner services. Our new phone system ensures our members enquiries are routed straight to our expert customer service teams. We have introduced a digital mortgage appointment booking service that allows our members to choose a time convenient to them. Our mortgage brokers can now communicate through a live chat channel and an anti-fraud service helps reduce delay for our members while identifying questionable applications.

At work and home, we all face a heightened and relentless threat from a cyber incident. We constantly review, monitor, and enhance our defences to ensure that our members’ interests are protected from a cyber-attack. We have introduced many new services over the past year to help combat this threat, including significant investment in security devices and a security partner that continually monitors our systems and reacts to any potential incident day and night.

The Society recorded pre-tax profit of £7.6m, a significant increase from the

£4.1m last year and higher than we had forecast, the result of a number of favourable factors all combining at the same time. The main elements of our higher than expected profit were: the ability during the year to maintain a wider margin than we had forecast, largely due to a lack of competition in savings markets; the ability to reduce our provisioning, due primarily to the unexpected strength of the housing market; the gains made from derivatives in the run up to our year-end, due to the changed outlook on interest rates; and the disposal of our old Head Office and Abingdon branch, at higher prices than their book value. There is more detail in the Strategic Report which follows my review.
There were no changes to the Bank of England base rate during the year, although the Society did make some changes to savings rates in April as well as restricting admission of new members to local postcodes only. This action was needed to better balance the demand for savings and mortgage products, yet despite this action by the Society, savings balances increased by over £100m during the year as demand for our products remained strong throughout the year.
The Society’s mortgage lending proposition is based on the provision of a competitive range of fixed and discounted mortgages, mainly for owner occupiers but also for buy to let landlords. The Society believes its purpose and role as a mutual is to lend to all types of aspiring homeowners and therefore in addition to the traditional core residential market, we also offer loans in areas of the residential market where appropriate returns for risk can be made, such as the first-time buyer products in the Help To Buy range, to customers with credible repayment plans who require interest only mortgages and to those seeking mortgages beyond normal retirement dates.
With a large pipeline carried forward from the previous year, the Society completed a record £214m of new lending during the year, as the market defied the logic that the impact of Covid-19 should have

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drained it of confidence. The Society experienced unprecedented high volumes of completions in June as well as a strong month in September, as borrowers took advantage of the Stamp Duty Land Tax concessions before they were withdrawn.
Our lending growth was slightly lower than in recent years but given the stern competition for business in a finite sized market, the level of growth was strong enough to maintain our record of at least 5% mortgage balance growth in each of the last ten years. In my view it is no coincidence that those ten years overlap the period of availability of low cost funding from the Bank of England via the Funding for Lending Scheme (FLS) and its successors, the Term Funding Scheme (TFS) and the Term Funding Scheme with additional incentives for Small and Medium-sized Enterprises (TFSME). The Society has been able to offer more mortgages and more competitively priced mortgages as a result of using the schemes, and our borrowing members have been the beneficiaries of the ensuing lower product pricing. At year end the Society had outstanding borrowings of £155m under TFSME.
I am also pleased to report that the performance of the mortgage book has thus far withstood the challenges anticipated to be caused by Covid-19. As I reported last year, just over 1,000 of our borrowers (about 14% of the total) took advantage of payment deferrals as a result of the impact of Covid-19 on their finances, but I am pleased to say that virtually all have been able to resume normal payments following their 3 or 6 month deferral period, with just 20 cases who are paying on an interest only basis as a temporary forbearance measure. The arrears statistics have not deteriorated and although it is fair to say that uniquely low interest rates assist the affordability of a mortgage, it is nevertheless a comforting fact for members that our borrowers have been collectively able to withstand the stress created by lockdowns and the pandemic generally. The figures provide tangible evidence of the underlying quality of the book and the first rate calibre of our underwriting team. As a result of this, and also because of the strength of the housing market and increase in property values, the Society has been able to release £440k of its bad debt provisions this year.
Despite the challenges to normal lifestyle thrown up by Covid-19, we continued throughout the year to support those who live and work in our branch communities. As a member-owned business, community is close to our hearts and we offer support not only through the products and services we provide, but also by donating our time, skills, and resources.

Our branches and head office each support their chosen charity partners through a blend of volunteering and fund raising, and the Society fund-matches the amounts raised to boost the total financial support to the community. In total this year, the Society made donations of £63,000 (2020: £59,000) in support of local charities and community organisations. The Society’s Charity account continued to be popular, particularly in the latter part of the year following interest rate changes in April and the nonavailability of several other accounts to new investors. The Society makes an annual donation of 0.3% interest to each account member’s preferred charity in addition to the interest paid to our savings member. This account generated £23,828 (2020: £25,000) during the financial year, and this was split between the nine partner charities. The Society’s Community Support Scheme, which provides donations and sponsorships to community projects, supported 22 different community organisations and groups during the year, donating a total of £11,432 (2020: £9,023). These donations are aimed at improving community life within the Society’s ten branch towns. Projects which benefitted from the scheme support in 2020/21 included:
Winchester Lido Sports Association received a cheque for £500 from Newbury Building Society's Community Support Scheme.
• Winchester Lido Sports Association’s historic Lido restoration.
• Be Free Young Carers, an Oxfordshire based charity who support the lives and wellbeing of young carers.

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• SeeAbility, a Tadley charity who support people with learning disabilities or autism, who may also have sight loss, to purchase much-needed specialist physio equipment.
• All Yours, a charity who provide individual sanitary product boxes available for those without access to monthly sanitary products.
• Whitchurch Children’s Festival. Our employees also undertook a range of fund-raising activities during the year: • Colleagues in our head office baked for the
Macmillan Coffee Morning and held a raffle which raised £746.
Wokingham branch team completed a 5km walk around Virginia Water and raised £1,016 for their branch charity, Sue Ryder.
• Seven members of our Wokingham branch team raised £1,016 by completing a 5km Walk to Remember challenge in aid of their charity partner Sue Ryder.
• Our Alton branch colleagues raised £547 by completing a walking challenge (each walking 89.2 miles in a month) to raise funds for their branch charity, The Trussell Trust.
• Our Thatcham and Newbury branches ran a book stall in their branches and raised over £400 in donations from members for their branch charity partner Newbury Cancer Care.
The Society also provides employees with two days paid leave to support community projects of their

choosing through volunteering. During the year, volunteering activities included some redecoration of facilities at Restore, a mental health charity in Didcot and a team from our Wokingham branch spent time volunteering to help preserve and manage the woodland area in Holt Copse, Wokingham.
Other events and activities undertaken in our communities included:
• In partnership with Thatcham Town Council, the Society sponsored a poetry writing competition.
• The Society was the main sponsor of the Julian House Basingstoke Big Sleep Out, an event to raise awareness and funds for the homeless in the Basingstoke area. Members of our Basingstoke branch team joined the Sleep Out on a rainy night in March.
• In January, employees from across the Society took part in an event organised by the Samaritans called Brew Monday which encourages taking time to talk to support colleagues, friends, and family. The Society donated funds to the Samaritan services which provide support to each of our branch towns.
As the Society encounters a new era in the provision of Financial Services, there are more options than ever for people on how to manage their money. The Board is aware of the Society’s need to embrace change by investing in its employees and technological capabilities, and members will therefore see changes and improvements in the way the Society delivers its products and services in the coming months and years. The growth and profitability of recent years has provided the foundations for the Society to make these investments, not only for the benefit of our current members, but also for those who will be our future members.
Technology acts as an enabler to our service proposition and whilst technological development will be a key focus, the Board also remains fully committed to a branch network, promoting a savings culture using fair and transparent products, which offer good value in the short, medium and long term. Our aspiration is for the Newbury brand to be instantly recognisable in our branch towns and synonymous with what differentiates the Society from banks: being a mutual, member centric, with relevant attractive products and exceptional customer service.
There are many challenges ahead for the Society as we continue to manage the impact of Covid-19 and

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specifically what it has done to catalyse different behaviours in the provision and consumption of financial services. The Society will continue to provide a full mortgage and savings service in its branches and we will operate in niches where the wider market lacks capacity or capability. Supplemented by the Society’s online capability, members will enjoy the real advantages of a ‘bricks and clicks’ service.
So, as we look to the future, our digital plans seek to support members through whichever channel best suits them; be it in-branch, by telephone, online or mobile. Over the next 18 months we will be making major changes to our banking platform, which will improve our online service. We are planning a mobile app that will allow members to interact with us from the convenience of their phone. We will be updating our branch phone system to ensure calls are answered quickly by one of our colleagues. We are also considering how best to invest in a new Customer Relationship Management (CRM) system to help our teams provide members with the very best service.
The focus and importance of environmental and climate change has never been more prominent and the Board’s three pillar approach to its Green ambition strategy is:
1. To minimise our own carbon footprint by improving the energy efficiency of our buildings and conserving energy through new technology;
2. To help our members lead greener lives by providing access to guidance, funding and support to help with home improvements; and
3. To support initiatives to make the homes on which we lend more energy efficient and better prepared for regulatory and environmental change.

And Finally
This is my final annual statement as your chief executive, as I will be retiring in March. I have been fortunate to have had the privilege of leading the Society for the last 15 years, a period in which we have accomplished so much. In business terms we have more than doubled our assets and our capital. In customer service terms, we have opened new branches in Basingstoke and Winchester and we have commenced our online myaccounts service. We have become increasingly involved in our communities and I hope you agree always put you the members first in our thoughts and actions.
I am the first to admit that the successes the Society has enjoyed are down to the whole Newbury team, and I have had exceptional teams past and present to work with throughout my tenure as CEO. We still have much to do, perhaps most notably in the development of our digital services, which will inevitably become the channel of choice for more members as time passes. And there is no better person to lead that transformation than Phillippa Cardno, our Operations & Sales Director, and I personally could not be more delighted that the Board has chosen to appoint her as my successor.
I am immensely proud of what the Society has achieved in the 15 years since I took over the CEO role from Nigel Fleming. My tenure started with a banking crisis and ends with a pandemic, but despite these significant distractions, the Society has developed and grown consistently over the whole period and now offers the citizens of our branch towns a choice in financial service provision denied to much of the country by the ill-fated demutualisations of the 1990’s and the closure of so many bank branches in the last decade.
Roland Gardner, Chief Executive 20 December 2021

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The Society exists to help our members build sustainable futures by being the trusted provider of savings and mortgages in our communities.
We are driven by our six core values, which represent what the Society stands for and form the basis for how the Society is managed and governed. The values were developed by colleagues from across the Society and ensure the Society does the right thing by our customers, communities and people.
The Society’s long term strategy, shaped around the Society’s key stakeholders, is to deliver steady and sustainable growth through:
• A focus on customer value over the long term;
• Developing and accelerating the Society’s digital transformation;
• Demonstrating a community conscience; and
• Looking after our people.
Further details on how we engage with stakeholders is set out below.

financially secure, operationally strong and
environmentally conscious

open and honest; a building society relied
on since 1856

value uniqueness and treat everyone as an individual

remain member-owned for your benefit

encourage a happy, healthy culture for our people to be the best
they can be

offer a first-class professional service where
you are at the heart of what we do


Support in difficult times
We began this business year much the same way we ended the last, focusing on supporting our savers and borrowers through the pandemic. Continuing to provide essential services safely in our branches and help support those isolating at home to access their money through online and telephone channels was our priority, as well as ensuring we assisted borrowers whose income continued to be impacted by the economic effects of Covid-19.
Despite the challenges, we had limited branch closures. We did however reduce branch opening hours, primarily to enable us to control employee movement across the branch network and limit infections, which would have likely resulted in more closures. Reduced opening hours meant branch teams could also help our head office teams support customers accessing online services for the first time and those in financial difficulty.

It has been a real team effort to support customers through a tough period and we are incredibly proud of our employees who worked extremely hard in challenging conditions.
Keeping standards high
In December 2020, the Institute of Customer Service (ICS) conducted their regular survey measuring the quality of customer interactions and experiences with the Society. The results were outstanding: Overall satisfaction scored 90.8, compared to the UK banks and building society average of 78.3, and our Net Promoter Score (NPS), which measures how likely a customer is to recommend an organisation, came in at 70.2, compared to the UK banks and building society average of 20.6. Of those surveyed, 9 out of 10 said they intended to remain a customer and 9 out of 10 said they intend to recommend the Society. We took the opportunity to measure the Society’s response to the Covid-19 pandemic and 88% of those surveyed rated us 8, 9 or 10 out of 10.

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In July 2021, we were delighted to win two British Banking Awards for “Best Building Society” and “Best Specialist Mortgage Provider”. These awards are entirely based on customer feedback, which makes us especially proud.
Responding to customer feedback
The ICS surveys are conducted every 12-18 months and not only give us quantitative insight on the quality of our service but also qualitative insight into what customers value about us and what more they would like from us. To complement the ICS surveys, we also encourage customer feedback at various touchpoints in our savings and mortgage customer journeys through Smart Money People (SMP), a ratings and review service dedicated to financial services. The qualitative feedback from the ICS and SMP, as well as root cause analysis from complaint handling, helps us prioritise our operational change, any training requirements and informs strategic business developments.
In 2020/21, customers asked us to increase online services and improve branch environment. We responded to this by:
• Launching a “test and learn” for an NBS Money app. The app has been trialled with a diverse group of savers and borrowers who helped us define what our permanent solution should look like.
• Implementing an online appointments service for mortgages. This enables customers to book appointments directly with Mortgage Advisers through our website at a time to suit them.
• Extending our video mortgage appointment service through Microsoft Teams technology. Accelerated due to the pandemic, this service is here to stay.
• Providing a live chat service to mortgage intermediaries to enhance the way we communicate with them and simplify the mortgage onboarding service for customers using this channel.
• Relocating and restyling our Abingdon Branch, the first of a full network branch refurbishment programme that will run over the next few years.
In addition, we launched our NBS rewards scheme as a thank you to members.
Placing ‘Customers First’ into the future
As we move forward, we will continue to centre our strategic plans around our customers. To grow and continue to be sustainable, we need to meet the needs of both existing and future customers. Our “Customer

First Approach” supports the view that customers want to borrow and save with an organisation that understands their needs and does good in the world; delivers value through products, supported by a firstclass customer service and underpinned by frictionless processes and appropriate digital solutions.
In 2021/22, our focus continues to be about striving for customer excellence across all channels – branch, intermediary and online. Our key priorities are to:
• Develop and implement a mobile app that enhances access to information and transactions.
• Refurbish another of our branches in a style that supports how customers interact.
• Launch a process optimisation program focusing on frictionless and digital solutions.
• Improve communications through branch and head office integrated telephony and live chat.
• Upgrade our core system to enable us to take advantage of new technologies to support services.
We encourage customers to continue to give us feedback. The next ICS survey will be conducted in the New Year and customers can rate and review the Society any time at
Our members are also actively encouraged to engage with the Society through the Annual General Meeting, either in person (if taking place physically) or through voting on Board resolutions.
Engagement with the communities in which the Society operates is through a mixture of fundraising, sponsorships, volunteering and donations.
Charity partnership scheme
Under this scheme our branch charity partners are chosen and voted for by our employees and our members. Charity partnerships are typically reviewed every three years or more to build long-term relationships with these charities to enable our staff, and hopefully our members, to engage in meaningful volunteering opportunities, which will help us to raise funds and awareness.
Each year the Society organises and undertakes fund raising events in our branches and at local community events. Members are invited to participate in many of these events.

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We were pleased to visit Hungerford Primary School following a £500 donation which helped purchase plants for their newly created 'mindful garden' aiming to promote mental wellbeing.

We helped Ladybirds Pre-school provide an 'enrichment day' of activities which included an Alpaca visit.

Newbury Building Society donated £500 to Loose Ends Newbury, to fund food and provisions for homeless and vulnerable people in Newbury.

Community support scheme
We are committed to giving something back to the communities in which our members and employees live and work. Each year we take part in a number of community events and help by giving donations and sponsorship to community organisations, groups and teams.
We consider applications for assistance in a number of different categories, including those that:
• Promote and encourage sporting activities;
• Promote and encourage activities in the arts;
• Support education and development; or
• Benefit the environment.
Typically award amounts are between £100 and £500.
The Chief Executive’s review on pages 7 to 10 provides more detail on the Society’s fundraising and volunteering activities and the projects which benefitted from the scheme support.

Charity account
The Society also operates a savings account where, in addition to the account holder receiving interest, the Society makes an annual donation of 0.3% interest donation to one or more of the Society’s charity partners, as nominated by the account holder. Interest is calculated on the account balance on a daily basis and paid directly to the charity annually. During the year ended 31 October 2021 this account generated £23,828 for the nine partner charities (2020: £25,000).
Our employees expect to be treated with empathy, respect and fairness, encouraged and supported in their development and training and their physical and mental wellbeing looked after. The Society’s People team, working alongside other departments, have established a series of objectives in support of the Society’s wider strategy, the key principles of which are:

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• Being an employer of choice;
• Encouraging and developing innovative leaders;
• Developing and empowering our people; and
• Fostering a culture of inclusion, engagement and wellbeing.
Working beyond the pandemic
Throughout the pandemic the Society has sought at all times to maintain a safe working environment for its employees whilst remaining open for business and accessible to its members. The Society responded rapidly to national lockdowns with the majority of employees adapting well to home-working. As the country emerged from lockdowns, whilst still mindful of government guidance, the Society has introduced a more hybrid and flexible way of working, with individual teams combining home working with regular periods in the Society’s premises.
Learning and development
During the year we introduced a structured competency framework to support the development of performance excellence across the Society. The framework comprises a set of core and functional competencies and incorporates the behaviours set out in the Society’s customer charter in support of service excellence.
We also continued with our Emerging Talent programme, originally launched in 2018, with delegates undertaking roles or projects designed to develop the necessary skills to take on new roles or increased responsibilities. Since the Scheme began, more than half of all delegates have taken up new challenges within the Society.
Supporting wellbeing
The pandemic highlighted the importance of wellbeing amongst our employees and our commitment to the health and wellbeing of our people continues to be a prime responsibility of the Society. During the year the Society has run several workshops covering physical and mental health and provides access to third party helplines for employees to confidentially discuss personal concerns. Several employees are trained mental health first-aiders.
Diversity and Inclusion
The Board has a diversity and inclusion statement which defines its commitment and goals in respect of diversity and inclusion. Newbury Building Society recognises that a quality Board is about selecting directors who think and communicate diverse thoughts, ideas and opinions and who have diverse backgrounds and education. The Board recognises the importance diversity and inclusion has on enhancing

culture which directly impacts on attracting and retaining employees and members.
To support the assessment of the skills and competencies of the Board and identify any gaps and development needs, all board members contribute to a board skills matrix. The skills matrix provides a holistic understanding of the board capabilities, strengthens succession planning and ensures that any director recruitment improves the board composition by facilitating a broader range of views, experience, background and values. Directors are appointed on merit and also because they positively impact the dynamics of the current board. All candidates, irrespective of background, are always treated respectfully and inclusively.
In respect of our employees, we endeavour to develop and maintain a culture in which our people feel supported and their thoughts and perspectives are valued. Since 2014 we have conducted employee surveys which gather employee views of the executive, job satisfaction, team, working conditions and in the 2020 survey how diversity and inclusion is embedded. We currently have an employee Net Promoter Score (NPS) of +36, which has increased from +21 in 2018. NPS is a measure of employee advocacy based on the question ‘would you recommend NBS as an employer to friends and family’. A positive score is considered good and a score exceeding +20 excellent.
In 2021 the Society established a Diversity and Inclusion working party sponsored by the Society’s CEO. The purpose of this party is to mainstream diversity and inclusion understanding and skills across the Society, to improve the employee experience and our capacity to meet diverse employee needs.
“When you get a diverse set of individuals in every conversation and people's voices are heard, that's when you get a big transformational difference. Inclusion is a sense of belonging and not feeling that there is a club that exists that you are not part of. Most of the time what is different about us is what is best about us. It all starts with listening.”
Diversity and Inclusion Working Party Statement.
The Society regularly reviews its recruitment practices and policy ensuring an inclusive and fair approach for both new and existing employees. We collaboratively refreshed our Purpose and Values during 2020 ensuring all employee views were represented. We

14 2021 Members’ Review - Newbury Building Society

review remuneration demonstrating how awards are allocated across employee groups. We have recently launched a competency framework to improve clarity in expected behaviours and core skills across the Society, to support consistency and ultimately to enhance succession planning. We will be enabling the production of ethnicity pay gap data in 2022 to complement our knowledge of our gender pay gap, as well as inviting employees to disclose their sensitive data so that we can better demonstrate decisions are made fairly across all employee groups.
In respect of our members, we aim to ensure product and service design meets the needs of our target market/customer base and we monitor the take up and cancellation of products and services, obtaining feedback from our customers via surveys, ratings sites and complaints. We have several measures in our conduct risk dashboard designed to test customer outcomes which are monitored closely. We record and monitor customer characteristics that may indicate vulnerability. Ongoing training and support is provided to those employees who have direct contact with these customers. Our efforts to embed inclusion within our culture by bringing to life our core values of vibrancy and respect positively impact customers, creating open and transparent conversations across all employee groups at all levels. By delivering and receiving feedback as part of ongoing communication, we encourage creativity to continually develop the customer experience.
Regulators expect the Society to act within the law and regulation at all times, in the interests of customers and with integrity and transparency. The Society considers that it adheres to the highest level of governance with the Board and other members of senior management maintaining open and transparent relations with the industry regulator and appropriate trade bodies. Regulators also expect the Society to be financially strong and maintain adequate levels of capital and liquidity.
The Society would not be able to serve its members without the help and support provided by third party suppliers, which includes brokers and industry bodies. Our suppliers expect us to be simple and straightforward to deal with and deliver a friendly and efficient service. Engagement with suppliers can take many forms including through specialist relationship teams as well as the more typical form of telephone

calls and written communications. Wherever possible the Society will seek to select suppliers that are local to the communities in which the Society operates, can be trusted to operate to the standards expected by the Society and that share and embody the Society’s core values.
Over the course of the financial year the Society has purchased goods and services from 271 suppliers with values ranging from less than £10 to over £841,000. It is the Society’s policy to pay suppliers within agreed terms providing the supplier performs according to the terms of the contract or agreement. The number of creditor days at 31 October 2021 was 13 (2020: 7).
In 2019 the Prudential Regulation Authority (PRA) published Supervisory Statement 3/19, “Enhancing banks’ and insurers’ approaches to managing the financial risks from climate change”. Since then the Society has committed itself to better understand the risks posed by climate change.
A summary of progress and our future ambitions is shown below.
Progress made
• Climate change has been embedded into Senior Management Functions, with the Finance Director having principal accountability for the development and implementation of governance arrangements and for progress of the Society’s Green ambition.
• Climate change risk is considered as part of regular discussion of top and emerging risks by the Executive management, Risk Committee and Board.
Future plans
• Continue to develop Board and Executive knowledge and awareness on climate change issues.
• Develop climate-change reporting capabilities and disclosures including base case data on energy usage.
• Consider and embed climate change risk in all policies where appropriate.

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Progress made
The Board has identified that the primary risk associated with climate change is that properties held as security become uninsurable or unmortgageable due to the impact of climate change. In 2020 the Society commissioned an independent assessment of the Society’s loan portfolio which identified that, whilst the greatest risks were considered to be flood risk and subsidence, this only applied to c1% of the Society’s mortgage assets. The Board considered that this did not pose a material risk to the Society and required no change to the Society’s lending activities.
However, the Society aspires to be a sustainable business which works in a socially responsible and environmentally friendly way by minimising our carbon footprint and helping our customers and communities live more sustainably. We understand that our operations have an impact on the environment and have identified three areas of strategic focus to realise our environmental ambition.

We will seek to
Minimise our own carbon footprint and find ways to offset the emissions we are unable to reduce

• Improving the energy efficiency of our buildings
• Conserving energy through new technology
• Using alternative sources where possible
• Reducing the usage of paper, water and plastic
• Reducing waste

Help our members live more sustainably, particularly in respect of the homes which we help to finance

• Provide access to guidance, funding and support to help with home improvements
• Work with the Building Societies Association task force to provide access to information and resources

Support our branch communities in developing and achieving their environmental goals

• Support initiatives to make homes on which we lend more energy efficient
• Assess and take action to mitigate the impacts on properties considered most at risk through new products, policies and homeowner support

Over the course of the financial year the Society has completed several actions to improve energy efficiency and reduce wastage across the Society, these include:
Energy and water usage
• Installed LED lighting across our Branch network and Head Office.
• Introduced occupancy lighting sensors at Head Office.
• Installed smart electric meters at our branches with energy use monitored on a monthly basis.
• Introduced sensors to taps at Head Office.
• Installed four new electric car charging stations at our Head Office.
Waste management
• Recycle all of our confidential waste material.
• Introduced mixed re-cycling points at Head Office and branches.
• Use follow-me printing to reduce any unnecessary printing.
• Removed the use of plastic cups from all of our employee and customer water coolers.
• Removed all plastic coverings from our passbooks.
Products and lending
• Launched a GoGreen Further advance mortgage.
• Launched a GoGreen Reward on our self-build mortgage product.
Future plans
The Society has a long term aspiration for its operations to be carbon neutral and has established a comprehensive programme of activities aimed at delivering our green ambition, including:

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Establish targets and methodologies for measuring emissions
Identify activities to reduce waste, water and energy usage
Embed “green” considerations in all appropriate policies

Provide information on improving EPC ratings
Product development
Long term improvement in the energy efficiency of properties funded by a mortgage from the Society

Funding a Green Education programme for local secondary schools
Sustainability projects

its energy consumption and emissions and intends to expand the collection and monitoring of emissions related data. In respect of the year ended 31 October 2021 the Society’s carbon dioxide emissions are as follows:

1 - Direct emissions
2 - Indirect emissions 3 – Indirect emissions

Natural gas consumed and travel with company owned vehicles
Purchased electricity for own use
Water consumption, employee business travel and contractor owned vehicles

tCarbon as
tCO2e 45.3

Total scopes 1,2 and 3


Risk management and Scenario analysis
Progress made
As outlined above, the Society commissioned externally sourced expertise to model the physical and transitional risks associated with climate change on the Society’s mortgage assets. The exercise modelled the impact of climate change by 2050 in a high emissions scenario with the results factored into the Society’s annual assessment of capital adequacy.
The Society is increasingly mindful of climate change risk when making business decisions and has factored consideration of climate change risk into mortgage underwriting decisions.
Future plans
The Society intends to repeat this exercise periodically in subsequent years and report on any trends.
The Society is committed to identifying and reducing

Figures for carbon emissions have been calculated by reference to:
Electricity and gas usage: Kilowatt hours consumed from meter readings
Travel: Business miles travelled by size of vehicle and fuel used
Water consumption: Consumption in cubic metres from meter readings
The Society expects to report on this data annually however comparison with data for the year ended 31 October 2020 has not been provided as this would not be fully representative of the Society’s operations going forwards as it does not include data where employees have been working from home and therefore would have been impacted by shifts in working patterns due to the pandemic.

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This Financial Statement is a summary of the information in the Audited Annual Accounts, the Directors’ Report and Annual Business Statement, all of which will be available to members and depositors free of charge on demand from all Newbury Building Society offices from 1 February 2022 or can be downloaded from from 4 January 2022.

In a year in which the pandemic continued to impact all areas of the business we welcomed more new members to the Society and saw members entrust the Society with an additional £110m of savings and deposits. We continued to invest in the Society, relocating our branch in Abingdon and completing the move to a modern Head Office in Newbury.
The Society’s financial performance was significantly better than plan, reflecting business conditions more favourable than anticipated. As a mutual, the Society has no shareholders and does not need to maximise

profits. Our objective is to balance the requirements of offering attractive rates for savers and competitive rates for borrowers with ensuring sufficient profits are generated to both maintain the Society’s strong capital position and to continue to enable investment in the Society’s capability and infrastructure.
Profit after tax of £6.0m compares with £3.2m the previous financial year represents a strong performance and underpins the financial resilience and strength of the Society.


Balance sheet Loans to Customers Retail Shares and Deposits

Management Expenses as a % of Mean Total Assets

Operating performance

Interest Margin as a % of Mean Total Assets
Mortgage Arrears - on accounts two months or more in arrears Profit After Tax

Regulatory Capital

Financial strength

Total Capital Ratio Liquid Assets as a % of Shares and Borrowings

Members - numbers


Mystery Shopping - % score achieved Complaints - as a % of members



£1.40bn £1.23bn

£1.06bn £1.02bn

£1.15bn £1.04bn





£0.15m £0.17m

£6.0m £3.2m

£89.9m £83.4m





73,854 72,275



0.07% 0.07%

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Net interest income
Net interest income increased to £17.9m (2020: £16.4m) as the reduction in interest received was smaller than the reduction in the level of interest expense. Interest received fell to £25.2m (2020: £26.7m) as a 7% growth in average mortgage assets was more than offset by the full year impact of the Society’s decision to lower its mortgage standard variable rate in response to the reduction in bank rate (to 0.1%) announced in April 2020. The Society also experienced an increase in the net cost of derivatives hedging fixed rate mortgages as the variable rate of interest received from the derivatives reduced in line with the decline in bank rate.
Interest expense fell to £7.2m (2020: £10.3m) as a result of a full year impact of the reduction in savings rates announced in April 2020 and a further reduction in the rates payable on certain savings accounts announced in April 2021 to balance the net flow of deposits.
Net interest margin
The Society’s interest margin reduced during the year falling by 0.06% to 1.37%. The Board seeks at all times to take a balanced view of the needs of borrowing and savings members. Mortgage pricing continued to come under pressure during the year as the market adjusted to lower interest rates and through increased and concentrated competition following a return to normal operating conditions as the UK economy opened up and activity increased with the introduction of government initiatives aimed at supporting the UK housing market.

Increased swap costs and a reduction in the rates earned on the Society’s liquid assets, both referred to above, also contributed to the reduction in net interest margin.
On the liability side we continued to offer competitive rates of interest to members whilst balancing the funding requirements of the Society.
Maintaining margin remains an important element of the Society’s financial strategy. The Board anticipates margin will remain under threat through a continuation of pressure on mortgage pricing and its future plans take this into account.
Other income and charges
Other income and charges comprise fees and charges not accounted for within the Effective interest rate (EIR) methodology and bank charges. Also included within this heading are fair value gains on derivative financial instruments of £1,526k (2020: fair value losses of £160k).
Derivatives are used solely for risk management purposes and are an important tool for managing exposure to changes in interest rates from the Society’s portfolio of fixed rate mortgages and savings products. The Society’s derivatives are all economic hedges with the majority in qualifying hedge accounting relationships however, hedge accounting does not remove all volatility.
During the year ended 31 October 2021 the Society transitioned the benchmark reference rate of its portfolio of derivatives from LIBOR to SONIA in

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Newbury Building Society MEMBERS’ REVIEW