Yorkshire Building Society (YBS) continues its climb up the performance tables, clinching the top spot in this year’s overall best-performing banks ranking, after moving up one position into second spot last year. Leading high street banks, however, have slipped down the rankings.
Despite being ranked eighth in terms of Tier 1 capital in the Top 1000, which excludes foreign-owned subsidiaries, YBS has finished first overall amongst the 10 largest domestic UK banks and at the top of the table for growth and operational efficiency, while placing second for profitability, asset quality and soundness.
While some of the UK’s high street banks saw their 2022 pre-tax profits (PTP) decline year-on-year, YBS’s PTP increased by 40%. Strong profitability in 2022 for the 159-year-old building society was supported by good trading performance in both mortgages and savings, combined with the rising interest rate environment.
Coventry Building Society (CBS) and Nationwide Building Society, the latter being the UK’s largest building society, have also improved their position in the performance tables this year. CBS has moved from fifth to third spot, while Nationwide has jumped from eighth to fourth.
Nationwide, which recorded its strongest financial performance on record last year, according to its 2022/2023 annual report, has finished top of the table for asset quality. The building society’s PTP increased by 86.4% compared to 2021. Coventry’s PTP, on the other hand, was boosted by almost 42%.
Only one of the leading high street banks, HSBC, which had the highest amount ($17.5bn) of PTP in 2022 of UK banks in the Top 1000, although declining slightly compared to 2021, has made it into the top overall five best-performing banks this year.
Lloyds Banking Group (LBG), which finished top of the overall performance table in 2022, has placed ninth this year, while Barclays, which finished fourth last year overall, has fallen to 10th spot this year. LBG’s 2022 PTP declined by 10.51% in 2022, while Barclays’ dropped by 25.7% during the same period.
NatWest has fallen five places to eighth spot in this year’s overall performance table, with a score. Standard Chartered, which finished last among its peers overall last year, has moved up to seventh spot, with its best performance in the liquidity category, which looks at improvements in a bank’s loans-to-assets and loans-to-deposits ratios.
While Fitch Ratings says that rising rates are supporting the earnings of UK banks and building societies, it expects increasing loan impairment charges and rising funding costs to weigh on earnings in 2023.
