TIDM10AI
RNS Number : 1227I
Principality Building Society
07 August 2019
Principality Building Society Interim Results Announcement for
the six months to 30 June 2019
Principality assets reach GBP10bn as it continues to invest in
the future
Principality Building Society has announced good half-year
results as the strategy of growing its core mortgage and savings
business continues to deliver. Net retail mortgage lending
increased by GBP285.6m in the first six months of this year,
bringing total assets to more than GBP10bn for the first time in
the building society's history.
To support the growth in its lending the Society raised GBP315m
of wholesale funding and grew retail savings by GBP176m,
maintaining its position as having one of the most competitive
savings rates on the High Street.
Underlying profit before tax was GBP21.2m compared with GBP27.4m
for the six months to June 2018 and is in line with internal
expectation. This reduction was planned and previously communicated
to Members and is driven by:
-- Significant investment in the modernisation of mortgage and
savings technology and branches to meet the changing needs of
Members.
-- Higher interest costs from continuing to pay better than
average savings rates to Members and the costs from securing
longer-term wholesale funding.
-- The run-off of the secured loans portfolio as Principality
deploys capital into retail mortgage lending.
Statutory profit before tax was GBP19.8m (June 2018: GBP24.9m)
which has been impacted by the above factors together with fair
value movements in derivatives.
For the second year running Principality has won the What
Mortgage award for Best Building Society Customer Service 2019.
This is reflected in the Society's Net Promoter Score which has
further improved to 80.8% (31 December: 78.6%). Eight out of 10 of
Members say they would recommend Principality to family or friends
based on their level of satisfaction.
Steve Hughes, Chief Executive of Principality Building Society,
said: "I am proud of the performance of my colleagues in the first
six months as our excellent customer service once again makes us
stand out from our competitors. We have delivered growth against a
backdrop of a highly competitive mortgage and savings market,
uncertainty over potential base rate changes and Brexit
negotiations.
"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borders, while major banks have withdrawn.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 and value
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 and we
know our Members value our great personal service.
"Our Commercial team has once again made an outstanding
contribution to help build our communities, by making GBP50m
available in competitive loans to help smaller housing developers
build homes across Wales. In light of increasing demand we have
topped up the fund committed to housing associations in Wales and
now have GBP75m available which will enable them to press ahead
with creating much-needed affordable homes. Their outstanding
efforts have made a significant contribution towards addressing the
Welsh Housing Agenda this year and is a shining example of how
Principality is making a difference to our communities."
Fundraising for its two charity partners, Teenage Cancer Trust
Cymru and Alzheimer's Society Cymru, got off to a winning start as
Principality donated GBP10,000 for each of the five victories by
Wales as they completed the rugby union Six Nations Grand Slam.
Colleagues raised a further GBP50,000, taking the total to an
impressive GBP100,000 in the first six months of the
partnership.
Principality has partnered with 18 secondary schools across
Wales, investing GBP160,000 and helping thousands of school
children to earn the equivalent of a GCSE in financial
education.
Lessons include household budgeting workshops, financial
planning, insurance, pensions, as well as preparing students for
adulthood and the world of work.
Principality has already helped more than 16,000 secondary
students in Wales as part of the Business in the Community Business
Class program since 2016.
Steve said: "I am very proud of the efforts our colleagues have
made to improve the lives of others. It is what we stand for as an
organisation. Our investment in financial education, for example,
is critical to equipping young people for their lives ahead. Our
people are our most important asset and make us stand out in the
sector, and our efforts to create a diverse and inclusive workplace
saw us acknowledged once again as one of the best places to work in
the UK."
Looking to the second half of the year Steve added: "We will
continue to seek to grow and invest in our business in a safe and
sustainable way for our Members and to make sure we are in a strong
position for current and future generations of Members.
"We expect economic and political uncertainty to continue over
the next six months and price competition in the mortgage and
savings markets to remain high. Any reduction in the UK base rate
would also cause further pressure on margins and could result in
changes to rates offered to our Members. Despite these challenges,
our profitability and balance sheet position remains robust and our
performance in recent years has built a solid foundation for us to
invest for the future."
PERFORMANCE HIGHLIGHTS
-- Total assets reached GBP10.1bn (31 December 2018: GBP9.7bn)
-- Retail mortgage balances of GBP7,779.8m (31 December 2018: GBP7,494.3m)
-- Savings balances have increased by GBP176.0m (30 June 2018: GBP309.3m)
-- Gross retail mortgage lending for the first six months of the
year of GBP795.8m (30 June 2018: GBP912.9m)
-- Statutory profit before tax of GBP19.8m (30 June 2018: GBP24.9m)
-- Underlying profit before tax of GBP21.2m (30 June 2018: GBP27.4m)
-- 81.3% of mortgages funded by savers (30 June 2018: 84.1%)
-- Strong capital with a Common Equity Tier 1 ratio of 24.73% (30 June 2018: 25.21%)
-- Customer Service Net Promoter Score of 80.8% (30 June 2018: 79.2%)
-- Net interest margin of 1.15% (30 June 2018: 1.29%)
Notes to Editors
About Principality Building Society
-- Formed in 1860, Principality is Wales's largest building society.
-- The Society is committed to supporting the communities of
Wales, with 53 branches and 17 agencies in Wales and the
borders.
-- Principality is the 6th largest building society in the UK.
-- The Society has assets of GBP10 billion.
-- Principality is committed to remaining a mutual organisation.
-- www.principality.co.uk
For more information, please contact:
Jamie Pike
Corporate Affairs Manager
Jamie.Pike@principality.co.uk
029 2077 3812
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END
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