Coventry Building Society profits decline amid mortgage cost reductions

Coventry Building Society, the UK's second largest building society, experienced a significant decrease in its annual profits for the year 2024, reporting a pre-tax profit of £323 million, down from the £474 million earned in the previous year. This decline in profit can be attributed to the reduction in mortgage costs, primarily due to a series of UK interest rate cuts that have occurred in recent months. The lower mortgage costs have also resulted in increased competition in the financial services sector, which has caused many savings customers to shift their funds into higher interest-bearing accounts. Additionally, despite this setback, Coventry Building Society managed to see growth in its mortgage and savings balances throughout the year. This growth is credited to the society's efforts in offering competitive rates and incentivizing savings among its members. Chief Executive Steve Hughes noted that the building society achieved this growth even in a challenging economic environment characterized by more persistent inflation and higher interest rates than anticipated at the start of the year. Furthermore, Coventry Building Society made headlines with its acquisition of The Co-operative Bank earlier in 2025. This £780 million acquisition marks a significant strategic move for the building society, effectively creating a banking powerhouse with millions of customers and a solid asset base estimated at £89 billion. The acquisition returns the Co-operative Bank to a mutual structure, which means it will be co-owned by its individual members rather than external shareholders and investors. This merger aims to enhance customer service and create a more robust financial institution. The fully integrated business will take time to realize, with plans for both brands to remain operational on the high street during the integration process. The end goal is to have Co-op Bank customers transition into becoming members of Coventry Building Society, fostering a more unified organizational culture. Meanwhile, the Co-operative Bank also reported an underlying pre-tax profit of £116.2 million for 2024, indicating a slightly reduced profitability in the face of similar challenges regarding lower mortgage costs and competitive savings rates. As both entities navigate these financial changes, they are working towards establishing a stronger position in the marketplace.