West.brom 6.15% Regulatory News (WBS)

West Bromwich Building Society

Preliminary results announcement for the year ended 31 March 2013

Forward Looking Statements

Statements in this document are forward looking with respect to plans, goals and expectations relating to the future financial position, business performance and results of the West Brom. Although the West Brom believes that the expectations reflected in these forward looking statements are reasonable, we can give no assurance that these expectations will prove to be an accurate reflection of actual results. By their nature, all forward looking statements involve risk and uncertainty because they relate to future events and circumstances that are beyond the control of the West Brom including, amongst other things, UK domestic and global economic and business conditions, market related risks such as fluctuation in interest rates and exchange rates, inflation/deflation, the impact of competition, changes in customer preferences, risks concerning borrower credit quality, delays in implementing proposals, the timing, impact and other uncertainties of future acquisitions or other combinations within relevant industries, the policies and actions of regulatory authorities, the impact of tax or other legislation and other regulations in the jurisdictions in which the West Brom operates. As a result, the West Brom's actual future financial condition, business performance and results may differ materially from the plans, goals and expectations expressed or implied in these forward looking statements. Due to such risks and uncertainties the West Brom cautions readers not to place undue reliance on such forward looking statements. We undertake no obligation to update any forward looking statements whether as a result of new information, future events or otherwise.

West Bromwich Building Society - Preliminary results announcement for the year ended 31 March 2013

The West Brom today announces its results for the financial year ended 31 March 2013.

Key highlights from the 2012/13 financial year include:

·; An increase in the Group's Core Tier 1 capital ratio from 13.3% to 14.1%, remaining one of the highest among UK banks and building societies;

·; A strong focus on effective liquidity management with robust levels of high quality liquid assets held throughout the period;

·; Retail savings inflows of £1.7bn, attracting some 26,400 new savers, with residential mortgages covered 1.16 times by retail deposits;

·; Net interest margin improving to 0.49% (2011/12: 0.47%); and

·; Pre-tax losses reducing for the fourth consecutive year to £9.4m (2011/12: £9.5m), despite challenging economic conditions.

Jonathan Westhoff, Chief Executive, commented:

"The West Brom can be very satisfied with its performance for the year, particularly given the ongoing challenges facing the wider economy and the slow pace of recovery. A further reduction in losses has again confirmed the validity of our Back to Basics strategy and its focus on the core building society activities of retail savings, investments and prime residential mortgages.

This progress has been sustained over a four year period, despite continuing pressure on interest margins as a result of a record low Bank Rate. At the same time we have significantly strengthened our Core Tier 1 capital ratio, a fundamental measure of financial strength, which increased to 14.1% during the year and has more than doubled since the start of our Back to Basics strategy.

Improvements can also clearly be seen in the way we support our members. We have launched a range of market leading mortgage products available to new and existing borrowers and endeavoured to offer savers a choice of competitive products tailored to their specific needs.

The Society also completed an extensive modernisation programme to improve facilities and service standards in our branches and greatly enhance our profile on local high streets.

This willingness to invest in the business sends out a clear message of confidence, which will continue into the year ahead as we embark on the construction of a new head office in our home town of West Bromwich."

31 May 2013

Enquiries:

The West Brom 0870 220 7785Jonathan Westhoff - Chief Executive

Mark Gibbard - Group Finance Director

Chief Executive's Review

Performance

The economic conditions over the year have remained extremely challenging and volatile, with a return to recession narrowly being avoided. Against this backdrop, the West Brom produced another very satisfactory performance, confirming once again the validity of our Back to Basics strategy with its focus on the core building society activities of retail savings, investments and prime residential mortgages.

Since the start of our strategic repositioning in 2009, the Society has reported four consecutive years of improved financial performance, with the pre-tax loss for the year reducing to £9.4m. It is encouraging to report this result despite persistent pressure on interest margins, arising from Bank Rate remaining at 0.5%, and a further deterioration in the commercial property market.

The Society continues to maintain a robust and balanced funding base and the majority of our funding remains retail savings balances supported by complementary wholesale funding programmes.

During the course of the year, the Society attracted gross retail inflows of £1.7bn and raised £250m of wholesale funds via a residential mortgage backed securitisation transaction. Shortly after the year end, we were successful in completing our second securitisation transaction, raising a further £380m of long term funding.

This diversification in our funding base, combined with a general easing of funding costs in the second half of the year following the introduction of the Government's Funding for Lending Scheme, contributed to the rise in net interest margin during the year.

The responsible and efficient use of member funds dictates the need to keep the Society's costs under constant review. We have taken steps to improve our operational systems and processes as part of the Society's future aspirations. These improvements are integral to the aims of the West Brom and support the provision of efficient and excellent service and market leading facilities for customers.

We have not diverted from our primary strategic objective of increasing the strength of our balance sheet and concentrating on the core building society activities of prime residential mortgages, savings and investments. Our continued progress in this respect is also evident in a reduction of a further 11% in the commercial lending book last year, a fall of circa £600m, or 35%, since exiting the market in this higher risk activity.

The success of this de-risking programme is reflected by the improvement in the Core Tier 1 capital ratio (a fundamental measure of financial strength) which increased from 13.3% to 14.1%. This ratio has now more than doubled since the implementation of the Back to Basics strategy, giving the West Brom one of the highest Core Tier 1 ratios among UK banking and building societies.

Commitment to members

The Society's activities are guided by the defining principle of a traditional building society: looking after the interests of our members.

We have made substantial progress in positioning ourselves to support the aspirations of people wishing to buy their own home. Our mortgage range has been enhanced to offer greater choice and value for both new borrowers and those customers looking to remortgage.

And while the savings market is unquestionably experiencing a downward shift in interest rates on offer, due in part to the impact of the Funding for Lending Scheme, we have maintained a regular presence in the Best Buy tables and consistently offered a selection of competitive products.

Perhaps the most visible improvement can be seen in our branch network, now completely modernised to a standard befitting our position as the region's largest building society. Our branches are not just more aesthetically pleasing, they also offer better customer facilities, including welcome desks, information screens and more space for private consultations.

A confident outlook

The unpredictable economic climate continues to have a restraining influence on the Society's financial performance and it would be unwise to make any bold predictions about when the country's recovery might gather pace.

Nevertheless we are actively investing for the future and maintaining a clear focus on our Back to Basics strategy. Our progress in the mortgage market and major improvements to the branch network show how we are catering for the needs of our members, both now and in the long term.

Our new head office development in West Bromwich town centre, due to begin construction later this year, is also very much a symbol of a building society that sees a positive future for itself.

The investments we have made, when combined with the successful reshaping of the balance sheet and our improving financial performance, demonstrate that the West Brom is well positioned both to deal with the current pressures in the UK economy and to prosper as and when the recovery gathers pace.

Jonathan Westhoff

Chief Executive

31 May 2013