Principality announces strong half-year results
PRINCIPALITY Building Society has reported a big rise in mortgage lending, but has seen its pre-tax profit drop by more than £2m.
Reporting its intermin results for the six months to June 30, its net residential mortgage lending increased by £340.3m, bringing total assets to £9.6bn.
To support the growth in its lending, the society grew its savings by £309.3m. The building society says its savings products have maintained a position as one of the best and most competitive on the high street.
Underlying pre-tax profit, which reflects the true trading performance of the business, was £27.4m, down £2.1m from £29.5m in June 2017. This was the result of a number of factors, including an increased investment in the business and higher interest costs of senior unsecured debt issued in the previous year.
Chief executive Steve Hughes said: “I am proud of the performance of my colleagues in the first six months as our customer service continues to make us stand out from our competitors. Our growth was delivered against a backdrop of a highly competitive mortgage market and uncertainty over base rate increases and Brexit negotiations.
“As a mutual owned by our members, we will continue to run the business for their long-term benefit. Our strong performance in recent years will allow us to make significant investment in our technology, our branches and our people. We need to do this to meet the demands of our current and future members. As we have already communicated, this investment will result in profits reducing over the next few years but it is the right long-term decision and our strong capital base affords us that opportunity.
“We remain committed to the high street in Wales and the borders, while major banks have withdrawn. For us to maintain our presence it is important our members continue to use their local branches and recommend us to family and friends so we continue to grow our society. We have actually seen branch transactions increase in the first six months of the year. We know our members value our great personal service and we will continue to provide that, I’d just love more people to experience it.”
A study found almost eight out of 10 (79.2%) of members would recommend Principality to other people. This promoter score is market leading and double the average in the financial sector.
Principality employees raised more than £86,000 for its three chosen charity partners (Llamau, School of Hard Knocks and Cancer Research Wales). The society has now raised well over £300,000 in the past two and half years for its three charities.
It also invested £44,000 to support more than 50 community groups and school projects across Wales. More than 1,200 schoolchildren were helped through activities, including financial education workshops. The society sponsored more than 200 students to complete the London Institute of Banking & Finance L2 qualifications, which are the equivalent to a GCSE.
Mr Hughes said: “Supporting our local communities and helping them prosper is what we do as a mutual building society. I am very proud of the efforts our colleagues have made to improve the lives of others. Our people are our most important asset and make us stand out in the finance sector. We encourage them to bring themselves, their personalities to work. It is that which makes Principality such a fantastic place to work. I am proud that our efforts to create a diverse and inclusive workplace saw us named as one of the best employers to work for in the UK this year.”
Looking to the second half of the year, Mr Hughes added: “We will continue to grow in a safe and sustainable way. It is clear our profits will be lower as we reshape and invest in our business for the longterm. Our balance sheet is strong, with a robust capital base and we have the resilience to withstand any economic headwinds. Our focus is clear – we will seek to improve our core mortgage and savings capability to meet the future needs of our members and customers.
“We will drive efficiency in the way we do things to ensure we provide value to our members and protect their interests for the long term.”