Leeds Building Society half-year results 2026: profit falls as technology investment builds

Leeds Building Society delivered what management called a solid first half, but the headline figures clearly show a slower rate of growth compared with 2025.

Profit before tax fell to £70.7 million, gross mortgage lending declined to £2.0 billion and fewer new borrowers and savers joined the Society. At the same time, savings balances reached £26.4 billion, regulatory capital increased to £1.8 billion and mortgage arrears remained low.

This is not a straightforward profit-growth story. Leeds is deliberately spending on a multi-year technology transformation, with its core platform now in the build phase. The key question is whether that investment can eventually improve efficiency and member service without putting too much pressure on near-term financial performance.

The full figures are available in the original company announcement.

Leeds Building Society's key figures

Metric	H1 2026	H1 2025	Direction
Profit before tax	£70.7 million	£104.4 million	Lower
Profit for the period	£54.3 million	£79.4 million	Lower
Gross mortgage lending	£2.0 billion	£2.6 billion	Lower
Net interest receivable	£187.4 million	£201.1 million	Lower
Total income	£197.2 million	£210.5 million	Lower
Administrative expenses	£109.9 million	£99.2 million	Higher
Regulatory capital	£1.8 billion	Not disclosed	Higher than £1.7 billion at December 2025
CET1 capital ratio	24.6%	25.8%	Lower
Adjusted cost-to-income ratio	50.6%	44.0%	Higher
Mortgage arrears	0.57%	0.56%	Broadly stable

Profit before tax fell by £33.7 million from the previous year. That represents a decline of around 32%, although management said performance was in line with expectations during a significant transformation build year.

The decline came from several directions. Net interest receivable fell by £13.7 million, while administrative expenses rose by £10.7 million. The impairment charge on customer loans also increased to £7.3 million from £2.2 million.

An impairment charge reflects the expected risk that some lending may not be repaid in full. It does not necessarily mean that losses of the same amount have already occurred, but the increase is worth monitoring alongside wider economic uncertainty.

Mortgage activity slowed

Leeds helped 13,000 people onto or up the housing ladder during the half, compared with 19,400 a year earlier. Of these, 6,450 were first-time buyers, down from 9,600.

Gross mortgage lending also fell from £2.6 billion to £2.0 billion. This fits management's description of a deliberately moderated growth rate, but it remains one of the clearest weak points in the results.

The Society continued to adjust its mortgage offering. Its new Start range combines a high loan-to-value ratio with competitive income requirements, allowing eligible borrowers to access loans worth up to five times their income.

It also expanded the Income Plus range. First-time buyers and existing homeowners with a minimum income of £75,000 may access borrowing of up to six times income, subject to responsible lending assessments.

These products could help Leeds compete for borrowers who struggle with affordability tests. However, higher loan-to-income and loan-to-value lending needs disciplined underwriting, particularly if household finances weaken. The low arrears figure provides some reassurance at this stage.

Savings remain a source of strength

Savings balances stood at £26.4 billion at the end of June, up from £26.1 billion at the end of 2025. Leeds also attracted 33,000 new savings members, although that was considerably below the 55,000 added during H1 2025.

During the first five months of 2026, the Society said it generated an additional £88.5 million of interest for members by paying savings rates 0.83 percentage points above the market average. In the equivalent 2025 period, the benefit was £88.8 million from rates 0.87 percentage points above average.

Paying competitive savings rates supports member value and can help attract stable retail funding. The trade-off is that higher interest paid to savers can place pressure on the net interest margin earned between funding and lending rates. Net interest receivable was lower during the period, although the announcement did not disclose a net interest margin figure.

Readers can find further background on the mutual through the Leeds Building Society company page and compare the latest figures with its stronger 2025 interim performance.

Capital is comfortable, but efficiency weakened

The balance sheet remains the strongest part of the update.

Total regulatory capital increased from £1.7 billion at the end of 2025 to £1.8 billion. Total equity attributable to members rose to £1.89 billion, while total assets reached £32.90 billion.

The Common Equity Tier 1 capital ratio was 24.6%. CET1 is a core measure of a financial institution's ability to absorb losses. The ratio declined from 25.8% in H1 2025 and 25.5% at the end of 2025, but Leeds said its overall regulatory capital remained comfortably above requirements.

Efficiency moved in the wrong direction. The cost-to-income ratio, adjusted for transformation costs, increased to 50.6% from 44.0%. This ratio compares operating costs with income, so a higher number generally means weaker efficiency.

That deterioration is understandable during a major investment programme, but it cannot be dismissed entirely as temporary. Investors following Leeds' financial instruments will want evidence that the technology programme eventually supports lower operating costs, better service or stronger growth.

Technology spending is the central strategic bet

Development and testing of a new mobile app are underway as part of the core technology platform modernisation. Leeds is also refurbishing branches, with York completed and work planned in Reading and Kendal.

The Society therefore appears to be pursuing both digital and physical service improvements rather than replacing one with the other. It cited research suggesting its branches contribute up to £286 million in wider social value across the communities served.

Broker satisfaction also improved, with the broker Net Promoter Score rising to 65 from 63 at the end of 2025. Net Promoter Score measures how likely customers or partners are to recommend a service.

What matters after the half-year results

There are three main positives. Savings balances increased, capital remained comfortably above regulatory requirements and arrears stayed low at 0.57%. These figures suggest the Society entered the second half with a resilient balance sheet and no obvious deterioration in borrower performance.

The negatives are equally visible. Profit declined sharply, mortgage lending slowed, new member additions were lower and the adjusted cost-to-income ratio increased. Loan impairments were also higher than in H1 2025.

Management sees significant opportunity despite economic uncertainty, but no numerical outlook or full-year profit guidance was disclosed. That leaves the next set of results carrying an important burden of proof.

Leeds must show that weaker near-term efficiency reflects productive investment rather than a lasting increase in its cost base. For now, the financial foundations look solid, but the success of the technology transformation will determine whether today's spending creates stronger member value and operating resilience over the longer term.