Back in profit after huge loss; Building society fightback.

Byline: DAVID OLD

NEWCASTLE Building Society made a profit in the first six months of this year following a torrid 2008.

The society made losses of pounds 26m last year - mostly down to exposure to failed Icelandic banks - but has rallied to move back into profitability.

Today it announced it had made pounds 750,000 in pre-tax profits for the first half of 2009, and chief executive Colin Seccombe said he hoped to claw back between 50% and 80% of the pounds 43m exposure to Icelandic banks.

NBS also attracted 20,000 new customers in those six months and has announced growth plans including three new savings contracts and proposals to open a flagship branch in Northumberland Street at the beginning of 2010.

Mr Seccombe said: "It's going to still be a tough, challenging environment, but I'm actually very much more confident about the path ahead than perhaps I was six months ago. I can see now a very clear way in which we can work our way through this situation. We have a really strong base to build on. I'm very upbeat about the future."

NBS hopes to get around pounds 3m from creditors of one of the Icelandic banks in the next week, with more to come by the end of the year.

Mr Seccombe said: "Hopefully we will see an improvement in that situation as we move through the second half of the year. We won't get all of our money back, but I think there are encouraging signs to think we can recover a substantial amount."

The society laid off 150 workers earlier this year, however, all but 18 were achieved through voluntary redundancy. And there are hopes the three new savings contracts for the Newcastle Strategic Solutions division could lead to more jobs.

Mr Seccombe added: "The compulsory redundancies were obviously still 18 more than I would have wanted but compared to the original situation we were confronted with it was much more pleasing.

"The three new savings won't be huge to begin with, but they have ambitious plans and if they take off we will have to staff up to meet that. Hopefully it will be our next big employment opportunity."