Profits at the Scottish Building Society fell by 41 per cent despite a small increase in mortgage lending during the year to the end of January.
Chief executive Mark Thomson said the mutual – established in 1848 – strengthened its financial position during the year, with reserves up by £1 million at £31.5m.
Total assets also edged higher to £388.9m, up from £378.2m previously, while mortgage assets were up by 1.2 per cent to £286.1m.
But after its investments in member loyalty initiatives, the society’s pre-tax profits fell to £1.3m, down from £2.2m the previous year.
The society’s Loyalty Promises initiative, launched last October, is designed to deliver long-term value to members served throughout the Edinburgh-based group’s network of 68 outlets, which includes six branches and 62 agencies. Among other things, the scheme ensures that “exclusive” products and offers are available both to savers and borrowers.
Thomson said: “We are pleased to have delivered another strong financial performance in line with our five-year plan in what continues to be challenging market conditions.
“These results underline that it is possible for the society to retain its financial strength while providing our members with long-term value.
“By operating a traditional business model where both our savers and our mortgage borrowers can consistently benefit from the best rates we are able to offer, we believe we are as relevant today as when we were founded 168 years ago.”