Skipton Building Society has reported an increase in profits in 2012 to £36.4 million, from £22.2 million in 2011, with net lending of £0.4 billion and an increase in retail balances of £0.2 billion.

Net lending for the group amounted to £356 million (2011: £412 million), of which £304 million was in the UK, representing 4.1% of the growth in the UK residential mortgage market compared to a ‘natural’ market share of 0.8%.

Its Mortgages and Savings division was the principal driver of its improved performance, returning to profitability, despite a £6.1 million contribution to the FSCS. Profits of £4.9 million represent an £18.4 million turnaround in performance.

There was an ongoing reduction in impairment losses, to £12.1 million from £29.5 million in 2011.

Arrears have fallen and the total number of loans where the arrears balance was greater than 2.5% of the total outstanding balance was 1.30% at the end of 2012 (31 December 2011: 1.45%). This compares to the latest CML industry figure as of Q4 2012, of 1.40%.

Meanwhile, 90.1% of group mortgage lending is covered by retail savings balances.

Homeloan Management Limited (HML), also moved back into profit. It achieved pre-tax profits of £0.8m following a pre-tax loss of £3.1 million during 2011.

David Cutter, Skipton Group chief executive, said: “We are pleased with the further upturn in our performance during 2012, which demonstrates that we have continued to balance appropriate business growth with prudence and a continuing focus on providing for our members’ financial needs.

“We are not complacent and keep a watchful eye on future external shocks which could impact the Society.

“However, against this backdrop, we are confident of achieving further improvement during 2013 and beyond, as the strength of our Mortgages and Savings division continues to gain momentum and is complemented by the continuing success of our estate agency business.

“Since the year end, we have utilised funding available from the Funding for Lending Scheme, to increase our lending to borrowers. Meanwhile, we will remain focussed on satisfying the saving and investment needs of our customers.”