NS&I provisional Q3 2012-13 results

• Q3 2012-13 Net Financing of -£0.1 billion
• Latest 2012-13 Net Financing forecast: -£0.75 billion
• 2013-14 Net Financing target set at £0 (+/-£2 billion)

NS&I today published its provisional Q3 (October-December 2012) results for the financial year 2012-13. Net Financing for the quarter was -£0.1 billion, bringing the year-to-date total to -£0.8 billion. NS&I’s target for 2012-13 is to deliver Net Financing of -£1 billion (in a range of £2 billion either side of this, -£3 billion to £1 billion) and we are on target to deliver this with a forecasted Net Financing of -£0.75 billion.

NS&I’s original Net Financing target for 2012-13 was £0 (+/- £2 billion). In the Autumn Statement (5 December 2012) the target was revised to -£1 billion. This was done to reflect changing market conditions and to ensure NS&I could continue to meet its operating framework of balancing the interests of its savers, taxpayers and the stability of the broader financial services sector. In Q3, retention levels remained high and outflows (money withdrawn by savers) remained low and in line with forecasts. There was also a decrease in new deposits.

Since Q3 ended NS&I has seen a further increase in its retention levels, which has lessened expected outflows, and also seen a very modest increase in sales. So NS&I’s latest Net Financing forecast for 2012-13, published in today’s Budget, is now -£0.75 billion.

NS&I’s original Value Indicator (a measure of NS&I’s cost-effectiveness in raising finance for the government in comparison to it raising funds through the wholesale markets) target for 2012-13 was to deliver positive value. However, gilt yields have been close to historic lows over the course of the year – well below the assumed levels on which NS&I’s Value Indicator target for the year was based. If NS&I were to deliver a positive Value Indicator figure this year then to do so it would have had to reduce its interest rates to levels significantly below those currently offered. In recognition of this, the Autumn Statement confirmed that, while NS&I’s overall 2012-13 Value Indicator target remains positive, a lower limit of -£320 million was set. NS&I’s Q3 2012-13 Value Indicator figure, published t oday, is -£40.6 million, bringing the year-to-date total to -£169.6 million.

NS&I’s £102 billion of stock means it is a key part of the UK savings sector and integral to the government’s debt financing strategy. Over the last three years NS&I has delivered £5.7 billion of Net Financing and saved the taxpayer £2.6 billion in net debt interest payments, measured by the Value Indicator. In tandem, NS&I, which has over 25 million customers, has delivered an average customer satisfaction score of 89% over the last three years*.

2013-14

NS&I’s 2013-14 Net Financing target, published in today’s Budget, is to deliver £0 Net Financing in a range of £2 billion either side of this, from -£2 billion to £2 billion. NS&I hopes to be able to return three of its fixed rate savings products to general sale during 2013-14: Fixed Interest Savings Certificates, Guaranteed Growth Bonds, and Guaranteed Income Bonds. However, given that its Net Financing target for 2013-14 is to balance inflows and outflows, it does not anticipate being able to return Index-linked Savings Certificates to general sale in 2013-14.

NS&I’s Value Indicator target for 2013-14 is again to deliver positive value but with a lower limit of -£320 million. The lower limit is important because it allows NS&I to continue to balance the interests of customers, the taxpayer and financial stability through a period of exceptionally low gilt yields.

Quarterly figures

All figures are in £ billion. 2012-13 figures only are unaudited and subject to change due to late transaction processing (evidence of identity), cancellation and any accounting adjustments. NS&I reports quarterly on gross inflows and outflows, Net Financing and total stock. Each quarter NS&I issues these unaudited figures, and publishes its Annual Report and audited accounts each financial year.

* Research for customer satisfaction scores was conducted by Ipsos MORI, an independent research company, among 17,414 customers for the figure showing average customer satisfaction over the last three years, January 2009–December 2012. A ‘positive rating’ is defined as a score of 7-10 on a 1 to 10 scale, where 1 means NS&I does not meet your needs at all and 10 means NS&I meets your needs completely.

** Research for customer satisfaction scores was conducted by Ipsos MORI, an independent research company, among 1,234 customers who transacted in the period October to December 2012. A ‘positive rating’ is defined as a score of 7-10 on a 1 to 10 scale, where 1 means NS&I does not meet your needs at all and 10 means NS&I meets your needs completely.

***Capitalised and accrued interest and prizes earned.

Notes to editors

1. NS&I is one of the largest savings organisations in the UK, offering a range of savings and investments to over 25 million customers. All products offer 100% capital security, because NS&I is backed by HM Treasury.
2. Net Financing – the measure of the net change of NS&I funds, meaning total inflows from deposits, retention of maturing monies and capitalised and accrued interest, less the total outflows from withdrawals and interest or Premium Bond prize draw payments.
3. Value Indicator – a measure of NS&I’s cost-effectiveness in raising finance for the Government which compares the total cost of delivering Net Financing and servicing existing customers’ deposits with how much it would cost the Government to raise funds through the wholesale market via equivalent maturity gilts and Treasury Bills.