Skipton Building Society half-year results 2026: profit falls as Connells struggles

Skipton Building Society has reported a mixed but financially resilient first half of 2026. Mortgage and savings balances grew faster than the market, capital remained strong and arrears stayed low. However, weaker performance from property group Connells pulled Group profit lower.

Group profit before tax fell to £110.3 million for the six months ended 30 June 2026, compared with £135.1 million a year earlier. Underlying profit before tax, which removes selected fair value movements, disposal gains and restructuring costs, declined from £131.9 million to £112.2 million.

The Society's core mortgages and savings operation remained relatively steady. The main deterioration came from Connells, where underlying profit before tax dropped from £24.9 million to £2.0 million in a challenging housing market.

Investors can read the original company announcement for the full financial statements and accompanying notes.

Skipton's key half-year figures

Metric	H1 2026	H1 2025	Change or comparison
Group profit before tax	£110.3 million	£135.1 million	Down 18.4%
Underlying Group profit before tax	£112.2 million	£131.9 million	Down 14.9%
Profit for the period	£84.0 million	£101.4 million	Down 17.2%
Total income	£846.4 million	£845.1 million	Broadly flat
Group net interest margin	1.24%	1.30%	Down 0.06 percentage points
Group mortgage balances	£34.6 billion	Not disclosed	Up 7.3% year-on-year
Society savings balances	£31.2 billion	Not disclosed	Up 5.9% year-on-year
Liquidity coverage ratio	186%	178% at December 2025	Higher
CET1 capital ratio	27.9%	28.2% at December 2025	Slightly lower

Total income was effectively unchanged at £846.4 million, but administrative expenses increased from £702.5 million to £730.9 million. This combination explains much of the reduction in profit.

The core Society operation held up well

The Society generated underlying profit before tax of £99.0 million, only modestly below £101.3 million in the first half of 2025.

Its net interest margin fell from 1.19% to 1.14%. Net interest margin is the difference between the interest earned on lending and the interest paid on funding, expressed relative to the relevant balance sheet. Skipton said new mortgage and savings business carried lower margins than products reaching maturity.

This pressure is worth watching because margins are central to the profitability of a building society. Even so, cost control helped. Society administrative expenses edged down by £0.2 million to £136.9 million, despite inflationary pressures.

Mortgage balances grew by 7.3% year-on-year to £34.6 billion, while Skipton's mortgage market share increased from 1.91% at the end of 2025 to 1.96%.

First-time buyers represented 46% of new lending, down from 50% a year earlier. The Society helped 11,497 first-time buyers during the period, compared with 12,322 in the first half of 2025. That remains a substantial contribution, although both measures moved in the wrong direction.

Borrower satisfaction was unchanged at 92%, while improvements to underwriting and broker processes reduced the average application-to-offer time by two days.

Savings growth came with a cost

Society savings balances increased by 5.9% year-on-year to £31.2 billion. Skipton paid interest rates averaging 0.65 percentage points above the market average and calculated that it returned £80.8 million of value to members.

This is positive for member value and deposit growth, but stronger savings rates can put pressure on net interest margin. The results show Skipton balancing its responsibility to members against the need to retain earnings and maintain financial strength.

The Society opened more than 40,000 ISA accounts during the period, lifting its ISA market share from 1.39% to 1.41%. Funds under management increased from £5.3 billion at December 2025 to £5.7 billion.

Savings member satisfaction slipped from 90% to 89%, matching the one percentage point decline in overall Society customer satisfaction.

Connells was the clear weak spot

Connells recorded underlying profit before tax of just £2.0 million, down from £24.9 million. The number of properties on which it exchanged contracts fell by 7% against a strong prior-year comparison that benefited from activity ahead of stamp duty changes.

Administrative expenses excluding restructuring costs increased by £22.6 million. Skipton attributed this mainly to salary inflation, investment and costs following acquisitions.

The breadth of Connells' operations offered some protection. Lettings and surveying helped offset weaker conditions in estate agency, while the business retained its market-leading position. Connells also generated £13.8 billion of lending for UK mortgage providers, up from a like-for-like £12.7 billion.

Management is continuing to invest, including a technology upgrade across approximately 1,200 branches involving the replacement of 15,000 computers and telephones. This may support efficiency and service over time, but the immediate financial picture is one of higher costs and sharply lower profit.

That is similar to the tension between near-term earnings and longer-term investment seen elsewhere in the sector, including in the Leeds Building Society half-year results for 2026.

Capital, liquidity and mortgage quality remained reassuring

Skipton's financial buffers continue to look substantial.

The liquidity coverage ratio rose from 178% at December 2025 to 186%. This ratio measures whether a financial institution holds enough high-quality liquid assets to withstand a short period of severe cash outflows.

The Common Equity Tier 1 capital ratio, a key measure of loss-absorbing capital, was 27.9%, compared with 28.2% at the end of 2025. The leverage ratio was unchanged at 6.7%.

Mortgage arrears also remained low. UK residential mortgages at least three months in arrears represented 0.31% of the book, compared with 0.30% at December 2025 and the disclosed industry average of 0.77%.

The small increase deserves monitoring, but there is no sign in these figures of a material deterioration in credit quality. Impairment and provisions actually fell from £7.5 million to £5.2 million.

What investors should watch in the second half

Skipton's first-half performance contains two distinct stories. The Society's core operation delivered mortgage and savings growth, controlled costs and maintained strong capital and liquidity. Connells, by contrast, experienced a steep fall in profit as housing activity weakened and expenses increased.

The most important variables for the rest of 2026 will be whether Connells can rebuild profitability, whether Group net interest margin stabilises and whether investment spending starts to produce operational benefits.

For now, balance sheet strength provides a meaningful cushion. But with Group profit down, margins contracting and uncertainty in the housing market, earnings recovery will depend on more than continued balance growth alone.