Savings balances with Leeds Building Society rose by £254 million to a record level of £7 billion in the six months to 30 June 2010.

The UK’s fifth largest building society attracted 34,000 new members taking total membership to 688,000 in the past six months while simultaneously witnessing a reduction in impairments on residential and commercial property loans.

Impairments dropped £2.6 billion from £26.6 million (30 June 2009) to £24 million in the first half of 2010.

Ian Ward, chief executive of Leeds Building Society said the mutual achieved a strong financial performance through a sustainable business model, which increased pre-tax profits by 10 per cent year on year to £18 million.

He added, ‘Strong profitability and high levels of capital enabled the society to repay £39 million of its subordinated debt. Our capital and reserves remain very strong at £515 million (£543 million 31 December 2009) and our regulatory capital is in excess of regulatory requirements.

‘As we move into a period of austerity following the worst recession for over 60 years, there are inevitably a very small number of borrowers experiencing difficulties meeting their mortgage repayments and we continued to work with these customers through this period.

‘Our residential arrears (2.5 per cent or more of outstanding mortgage balances) have increased slightly to 2.32 per cent.’

Ward said the half-year performance was £177 million above the mutual’s natural building society market share.

He explained, ‘Throughout the first half of 2010, we offered a wide range of mortgage products, with new lending totalling £400 million, enabling many people to remortgage or buy their first home.

‘All of the society's residential mortgage lending is funded entirely by retail savings and we are targeting £1 billion of new lending this year.’