The Company's previously announced dividend policy of paying out approximately 40% of consolidated earnings to shareholders remains in place, achieving a dividend cover ratio of around 2.5 times, in ordinary circumstances. During July 2019 an interim dividend of 7.0 pence per share was paid, determined, in accordance with the Group's stated policy, as 50% of the previous year's final dividend.
Following the completion of the PM12 residual sale on 27 June 2019 the Board considered the profit generated and the capital released by that transaction and determined that it was appropriate to return a portion of this capital to shareholders by way of a share buy-back programme. During the year the Group bought back 6.0 million of its ordinary shares at a cost of £26.7 million, including stamp duty and transaction expenses (note 20); £26.5 million excluding costs, these shares being held in treasury. Treasury shares may subsequently be cancelled.
Other financial highlights include:
Growth in lending volumes of 8.5% to £2.53 billion (2018: £2.33 billion)
Net interest margin ('NIM') improved to 229bp (2018: 221bp)
Cost income ratio increased to 42.1% (2018: 40.6%)
Underlying profit before tax increased 5.0% to £164.4 million (2018: £156.5 million)
Retail deposit balances up 20.7% to £6.39 billion
Technology developments enhancing customer and broker service
Cost of risk (now measured under IFRS 9) 7bp (2018 IAS 39: 6bp)
Strong capital base supporting growth, with basic CET1 of 13.7% (2018 13.8%)
