NEWS RELEASE YORKSHIRE BUILDING SOCIETY ANNOUNCES STRONG 2017 ANNUAL RESULTS

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1 NEWS RELEASE Thursday, 01 March 2018 YORKSHIRE BUILDING SOCIETY ANNOUNCES STRONG 2017 ANNUAL RESULTS Yorkshire Building Society Group has today announced a strong financial performance for 2017, as it continues to help millions of people across the UK achieve their saving and homebuying goals. Despite a competitive market, the mutual recorded a 9% increase in pre-tax profits to 165.8m (2016: 151.5m) and a 25% rise in core operating profit to 159.2m (2016: 128.0m) while delivering sustainable long-term value for customers. The Group supported thousands of people in homeownership, financing more than 36,000 home loans, increasing gross mortgage lending by 13% to a record 8.1bn (2016: 7.2bn) and net lending by 46.5% to 1bn (2016: 0.7bn). It supported members in saving for their futures, opening 193,000 new accounts and increasing savings balances to 28.9bn (2016: 28.7bn) key highlights: Core operating profit of 159.2m (2016: 128.0m) and profit before tax of 165.8m (2016: 151.5m) Gross lending of 8.1bn (2016: 7.2bn) and net lending of 1bn (2016: 0.7bn) Average Net Promoter Score of +41, a seven-point improvement (2016: +34) i Helped homeowners by providing 36,064 mortgages (2016: 27,229), including 7,011 (2016: 6,398) to first-time buyers ii Maintained good value savings rates, paying on average 0.28% higher rates than the rest of market average iii Common Equity Tier 1 ratio of 15.8% (2016: 14.9%). Liquidity at 6.1bn (2016: 4.7bn) and liquidity ratio of 15.7% (2016: 12.8%), ahead of regulatory liquidity requirements Yorkshire Building Society is a member of the Building Societies Association and is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Yorkshire Building Society is entered in the Financial Services Register and its registration number is Head Office: Yorkshire House, Yorkshire Drive, Bradford BD5 8LJ. References to 'YBS Group' or 'Yorkshire Group' refer to Yorkshire Building Society, the trading names under which it operates (Chelsea Building Society, the Chelsea, Norwich & Peterborough Building Society, N&P and Egg) and its subsidiary companies. Egg is a registered trademark of Yorkshire Building Society. End Youth Homelessness (EYH) is a national movement of local charities working together to end youth homelessness in the UK. EYH trades through its designated Administrator, Centrepoint (charity number ). Small Change Big Difference is a registered trademark of Yorkshire Building Society. All communications with us may be monitored/recorded to improve the quality of our service and for your protection and security. Calls to 0800 numbers are free of charge from a landline or mobile. Calls to 03 numbers are charged at the same standard network rate as 01 or 02 landline numbers, even when calling from a mobile.

2 Mike Regnier, Chief Executive of Yorkshire Building Society, said: I m pleased to be reporting a strong financial performance for 2017, despite a very competitive market and ongoing wider economic uncertainty. We ve continued to fulfil our core purpose of helping people achieve their key financial goals, whether that s buying a home, saving for today, or leaving a legacy for the next generation. Our strategy to concentrate on our core business areas has led to adjustments in how we operate. As we announced in 2017, we are making changes to our brands and high street locations, and are withdrawing from the current account market. We believe these changes, which will be completed in 2018, are vital in ensuring the Society is wellpositioned for the future so we can continue to provide good long-term value to our members. It is important that we become a more efficient building society, and the year-on-year reduction in operating costs, along with improvement in the management expense ratio shows the progress we are making. We exist to help our members with their financial objectives, so continually improving our service is fundamental to us. The increased focus on our core businesses of mortgages and savings has helped us in this aim, illustrated by the year-on-year increase in customer advocacy. We will continue to prioritise improving customer service and delivering good long-term value to our membership while maintaining financial strength results highlights: Achieving sustainable performance and real financial security through mutuality Total capital ratio of 20.1% (2016: 17.3%) Liquidity at 6.1bn (2016: 4.7bn) and liquidity ratio of 15.7% (2016: 12.8%), ahead of regulatory liquidity requirements Net interest margin of 1.23% (2016: 1.22%) and a net interest income of 502.1m (2016: 475.6m), in line with our strategic plan and supporting investment in the business Cost:income ratio of 63.4% (2016: 67.2%) and management expense ratio of 0.83% (2016: 0.89%)

3 Proportion of accounts in arrears by more than three months (including possessions) reduced to 0.56% (2016: 0.76%), against an industry average of 0.88% iv, reflecting the high quality of lending and the benign economic conditions Completed three bond issuances as part of our continued wholesale funding strategy, demonstrating market confidence in the Group Long-term local and foreign currency senior unsecured debt rating with Moody s Investors Service upgraded to A3 in September 2017 Delivering a simply brilliant customer experience Average Net Promoter Score of +41, a seven-point improvement (2016: +34) 1 Maintained good value savings rates, paying on average 0.28% higher rates than the rest of market average 3 Invested in changes to our online service which will enable mortgage customers to carry out product transfers at an earlier date and more efficiently Digitalised our ISA transfer process to ensure it is quicker and simpler for members Won 25 industry awards, with accolades for mortgages, digital experience, customer service transformation, process improvement and charitable support, including Best First Time Buyer Mortgage Provider (Moneynet Personal Finance Awards), Best Business Improvement Project Under 90 Days (Process Network Excellence Awards), and Financial Service E-commerce Website of the Year (Northern E-commerce Awards) Providing real help with real life to our members Helped first time buyers get on to the property ladder more than 7,000 times Opened 193,000 new savings accounts and increased savings balances to 28.9bn (2016: 28.7bn) Ensured our savings members benefited from the first Bank Rate rise in a decade by passing on the full 0.25% increase to all our existing and new variable rate savers Created an innovative scheme to help employers improve the financial wellbeing of their employees by working with Salary Finance to provide an easy-to-use, directfrom-salary regular savings account Expanded the availability of mortgages for people with non-standard incomes, including those who are self-employed, through our intermediary arm, Accord Mortgages Became the first lender to work with Age Partnership to give customers coming to the end of an interest-only mortgage access to full-market free advice

4 Increased mortgage flexibility by offering an interest-only option for new borrowers, through Accord Making a positive impact on colleagues and communities Raised 293,352 for End Youth Homelessness in the first 12 months of a three-year partnership, helping to provide young people with a safe place to call home Yorkshire Building Society Charitable Foundation, which is largely funded by members taking part in the Small Change Big Difference scheme, made more than 200 donations totalling 234,684 to UK charities Helped 56% of colleagues to share their skills and experience with charities and good causes by making use of their annual 31 hours volunteering allowance Delivered financial education to more than 7,000 young people in more than 70 schools through our innovative Money Minds programme Contributed 3,800 hours of volunteering support to charities committed to ending youth homelessness Ranked amongst UK s Best Large Workplaces and a top 30 employer for working families Doubled the annual intake on our award-winning apprenticeship scheme, which offers young people a permanent role on the same terms and conditions as other colleagues as well as the chance to complete relevant professional qualifications Introduced a wellbeing programme to help colleagues maintain good mental and physical health, and support them in times of ill-health, which was accessed by 1,200 colleagues in 2017 Reduced our gas and electricity consumption by 9% year-on-year, and helped 500 colleagues to car share and more than 260 to take part in the Cycle to Work scheme ENDS PRXX-18 Notes to Editors About Yorkshire Building Society Yorkshire Building Society has assets of 42.0 billion and has more than 3 million customers.

5 The YBS Group includes Yorkshire Building Society and its brands Chelsea Building Society and Norwich & Peterborough Building Society, and its subsidiary companies including Accord Mortgages. For more information on Yorkshire Building Society visit For further media information please contact: Press Office on i KPMG Nunwood Customer Voice Programme, January to December Based on 25,107 completed interviews with customers. In 2017 we developed this measure to incorporate the views of our intermediary network as well as the Group s mortgages and savings customers across all brands. Net Promoter, Net Promoter Score, and NPS are trademarks of Satmetrix Systems, Inc., Bain & Company, Inc., and Fred Reichheld. ii Excludes further advances and buy-to-let. iii Average rates are based on savings stock from CACI s Current Account & Savings Database (CSDB) which covers 86% of the retail savings market (based on stock value). Data period January to October 2017, Yorkshire Building Society average rate 0.98% against a rest of market average of 0.70%. iv UK Finance (December 2017).

6 Group Income Statement m m Net interest income Non-interest income Net gains/ (losses) from fair value volatility Net realised profits/(losses) Total income Administrative expenses (339.5) (346.0) Operating profit before provisions Provisions (30.5) (17.1) Profit before tax Tax expense (41.4) (37.3) Net profit Reconciliation of Core Operating Profits m m Statutory Profit before tax Reverse out the following items: FSCS levy Non-core investments (5.7) (0.6) Timing differences - fair value volatility (7.4) (0.3) Mergers adjustments to balances acquired (3.5) (2.8) Other non-core items 7.5 (24.4) Core Operating Profit

7 Group Statement of Comprehensive Income m m Net profit Items that may subsequently be reclassified to profit and loss Available-for-sale investments: Valuation gains taken to equity Amounts transferred to income statement (included in net realised profits) (8.0) (0.7) Tax on available for sale securities (1.0) (2.3) Effect of change in corporation tax rate Cash Flow hedges: (Losses) / gains taken to equity 6.8 (25.7) Amounts transferred to income statement (included in net realised profits) (0.8) 46.0 Tax on cash flow hedge reserve (1.6) (5.7) Effect of change in corporation tax rate Items that will not be reclassified subsequently to profit and loss Remeasurement of net retirement benefit obligations 49.6 (27.0) Tax relating to retirement benefit obligations (13.5) 7.6 Effect of change in corporation tax rate Effect of change in corporation tax rate on prior year movements in general reserves - - Total comprehensive income for the year Group Statement of Financial Position m m Liquid assets 6, ,675.9 Loans and advances to customers 35, ,103.3 Derivative financial instruments Fixed and other assets Total Assets 42, ,595.5 Shares 28, ,693.2 Borrowings 9, ,916.9 Derivative financial instruments Other liabilities Subscribed capital Subordinated liabilities Reserves 2, ,220.9 Total Liabilities 42, ,595.5

8 Key ratios % % Net interest margin Management expenses/mean assets Asset growth Loans and advances growth Member balance growth Liquidity ratio Funding ratio Gross capital Free capital Total capital ratio Common equity tier 1 ratio Leverage ratio Cost:income ratio