Final Results

Coventry Building Society 
18 February 2003

18 February 2003



Coventry announces outstanding results
Society achieves gross lending and savings records



Coventry Building Society, the fifth largest building society in the UK, has
today announced its results for the year ending 31 December 2002.



Commenting on the results, Martin Ritchley, Chief Executive said:

  '2002 proved to be an outstanding year for the Coventry.  Not only did net
  savings receipts top £1 billion for the first time ever,  we also achieved 
  record levels of gross mortgage lending of £1.9 billion.   At the same time, 
  we enhanced our position as one of the most cost efficient lenders in the UK.  
  These results reinforce the Coventry's position as one of the country's most 
  successful building societies.'



Highlights of the year

•          Over £1 billion of net savings receipts - about two and a half times
           our natural share

•          Record gross lending of almost £1.9 billion

•          Growth in total assets of 12.3% to over £8 billion

•          Management expenses ratio reduced to 0.65% of average assets

•          Profit before tax increased by 7.6% to £45.3 million

•          Moody's credit rating upgrade in the year to A2/P1

•          Just six properties in possession at year end





Reviewing 2002, Martin Ritchley continues:



'2002 was an excellent year for Coventry Building Society with record levels of
savings receipts and gross lending.  Further improvements in efficiency built
upon our enviable position as one of the lowest cost operators within the
sector, whilst the development of new channels of distribution, in particular,
the internet, helped us to deliver our competitive product range to a much wider
membership base.



'The Society's total assets grew by 12.3% to £8,058 million, largely driven by a
growth of £677 million in our mortgage book.  Funding for this expansion came
from a truly outstanding performance in the retail savings market and in 2002,
savings receipts grew by over £1 billion, £416 million more than last year,
which was itself a record.



'Over the past few years, we have consistently narrowed our interest margin
(principally the difference between the interest we earn from borrowers and the
interest we pay to savers) for the benefit of our members.  2002 was no
exception and the Society's net interest margin narrowed from 1.08% to 1.05% of
average assets.  This has enabled us to offer even more competitive mortgage and
savings products.  As a consequence, we advanced record gross lending in an
intensely competitive mortgage market, as well as achieving record savings
receipts.



'The Coventry's net interest margin remains one of the narrowest in the industry
and the fact that the Society can operate so effectively at this level
underlines, not only the success we have achieved in managing our cost base over
a number of years, but also the significant competitive advantages which we
derive from our building society status.  Quite simply, we have no dividends to
pay to external shareholders, which means we can offer even more competitive
rates to borrowers and savers alike.



'I have always stressed the importance of our low cost base.  Despite additional
expenditure invested in developing new channels of distribution, I am pleased to
report a further fall from 0.67% to 0.65% in our ratio of management expenses to
average assets - the seventh successive year of improvement.  This cost
efficiency, combined with further growth in non-interest related income, up from
£16.7 million to £18.0 million, enabled the pre tax profit to increase by 7.6%
to £45.3 million.  This contributed to the Society maintaining its strong
capital position.  I am pleased to report that our financial strength and
consistent record of success was recognised during the year by Moody's, the
international credit rating agency, which upgraded its assessment of the
Coventry to A2/P1 (from A3/P2).



'Our arrears performance has further improved during the year; our arrears are
well under half the industry average, thereby providing a further cost advantage
to improve our competitive position.   Low interest rates have undoubtedly
helped in reducing arrears and just six properties were in possession at the
year end.



'As always, our future plans are framed to meet the needs and aspirations of our
members, both current and future.  In an increasingly uncertain world, the
demand for financial products and services, from a trusted source, will continue
to grow.  As a building society with a reputation for fair play and integrity,
the Coventry is particularly well placed to build on the strong platform we have
constructed over the past few years to meet these demands.  I am sure we can
look forward to the future with confidence.'



Notes to Editors

•           Coventry Building Society is currently the fifth largest building
            society in the UK

•           Martin Ritchley, Chief Executive is available for interview and
            comment

•           Photographs of Martin Ritchley can also be downloaded from the photo
            library on our website

•           A summary of the results for the year ended 31 December 2002 are
            attached







                           Coventry Building Society     
                 Results for the year ended 31st December 2002


Key Results                                                     Year Ended           Year
                                                                  31.12.02            Ended
                                                                                   31.12.01
                                                                      £m         (as restated)
                                                                                       £m

Pre tax profits                                                       45.3                42.1
Mortgage provisioning                                                  2.9                 2.7
Gross lending                                                        1,865               1,490
Net lending                                                            677                 615
Net receipts from shares (2)                                         1,035                 619
Total assets                                                         8,058               7,175




Key Ratios                                                       Year Ended           Year
                                                                  31.12.02            Ended
                                                                                    31.12.01
                                                                     %             (as restated)
                                                                                         %

Asset growth                                                         12.30               11.92
Commercial asset growth                                              11.66               11.84
Gross capital                                                         5.87                5.91
Free capital                                                          5.81                5.80
Net interest margin (3)                                               1.05                1.08
Management expenses to average assets (3)                             0.65                0.67
Profit before tax to average assets (3)                               0.59                0.62




Income and Expenditure Account                                    Year Ended           Year
                                                                   31.12.02            Ended
                                                                                     31.12.01
                                                                      £m           (as restated)
                                                                                        £m

Net interest receivable                                               80.0                73.6
Other income and charges                                              18.0                16.7

Total income                                                          98.0                90.3
Management expenses                                                 (49.8)              (45.5)
Provisions for bad and doubtful debts                                (2.9)               (2.7)

Profit before tax                                                     45.3                42.1
Tax                                                                 (14.2)              (12.6)

Profit after tax                                                      31.1                29.5





Statement of total recognised gains and losses                    Year Ended           Year
                                                                   31.12.02        Ended 31.12.01
                                                                                   (as restated)
                                                                      £m                £m


Profit for the financial period                                       31.1                29.5

Prior year adjustments                                                 2.4                   -


Total gains and losses recognised since last annual
report                                                                33.5                29.5



Balance Sheet                                                   As at 31.12.02    As at 31.12.01
                                                                                   (as restated)
                                                                      £m                £m
Assets
Liquid assets                                                      1,521.2             1,331.9
Mortgages                                                          6,481.6             5,804.8
Fixed assets                                                          28.6                28.9
Other assets                                                          26.5                 9.5

Total assets                                                       8,057.9             7,175.1

Liabilities
Shares                                                             6,213.2             5,178.1
Borrowings                                                         1,368.9             1,574.2
Other liabilities                                                     30.6                23.7
Subordinated liabilities                                              35.0                20.0
Subscribed capital                                                    40.0                40.0
Reserves                                                             370.2               339.1

Total liabilities                                                  8,057.9             7,175.1





Cash Flow Statement                                               Year Ended           Year
                                                                   31.12.02            Ended
                                                                      £m             31.12.01
                                                                                         £m

Net cash inflow from operating activities                            193.2                79.3
Returns on investments and servicing of finance                      (4.8)               (4.8)

Taxation                                                            (17.7)              (14.8)
Capital expenditure and financial investment:
   Purchase of investment securities                             (2,549.0)           (2,096.0)
   Sale and maturity of investment securities                      2,397.0             2,024.0
   Purchase of fixed assets                                          (5.7)               (4.6)
   Sale of fixed assets                                                  -                 0.1
   Finance lease payments                                            (0.4)               (0.2)
Financing
   Issue of subordinated liabilities                                  15.0                20.0

Increase in cash                                                      27.6                 3.0


Notes to the accounts.

(1)Comparative figures have been restated to reflect a change of accounting policy on adoption of FRS 19 Deferred Tax.
In addition, balance sheet comparatives have been restated following publication of ICAEW Tech 20/01 Mortgage
Lenders-Accounting for self insurance, which requires that deferred high loan to value fee income held on the balance
sheet be netted off against mortgage balances.  Previously this was included within accruals and deferred income, which
forms part of the other liabilities balance on this statement.

(2)Includes interest added to the accounts.

(3)Net interest margin, management expenses as a percentage of average assets and profit before tax as a percentage of
average assets have been calculated on the basis of the average 2002 and 2001 total assets.



This announcement will be sent to holders of the Society's Permanent Interest
Bearing Shares.

Copies are available from the Society's Head Office:
Coventry Building Society, Economic House, PO Box 9, High Street, Coventry. CV1 5QN.
Contact :  David Stewart ACA, Finance Director
Telephone [phone] www.coventrybuildingsociety.co.uk






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