TIDM10AI
RNS Number : 2639V
Principality Building Society
06 August 2020
Principality Building Society Interim Results Announcement for
the six months to 30 June 2020
Principality supports customers and communities through
pandemic
Principality Building Society focused all its efforts on
supporting members, customers and colleagues during a challenging
first half of the year. The building society has granted more than
15,000 homeowners a mortgage payment deferral, helping them to cope
with the financial uncertainty created by the COVID-19 pandemic and
supported communities by keeping its branches open throughout the
lockdown period.
Mike Jones, Interim Chief Executive at Principality, said: "In
the face of significant disruption and uncertainty we have
maintained our award-winning customer service. During the first
half of the year we've had to deal with a number of operational
challenges, not least enabling 700 colleagues from our head office
to work effectively from home. At the same time, we have maintained
our focus on an investment programme which will enable us to offer
current and future members increased flexibility in managing their
savings and mortgage needs. We've launched an app for those looking
to save for their first home and have improved our online
functionality and security meaning customers and members can access
more services in this way."
For the third year running Principality has won the What
Mortgage award for Best Building Society Customer Service. This is
reflected in the Society's Net Promoter Score which is well above
the sector average at 81.2%, meaning eight out of 10 of members say
they would recommend Principality to family or friends based on
their level of satisfaction.
Given the detrimental impact COVID-19 has had on charities,
Principality colleagues still found a way to raise money. With
match funding, a total of GBP105,000 has been donated so far this
year, split equally between Principality's two charity partners
Teenage Cancer Trust Cymru and Alzheimer's Society Cymru.
Principality has also partnered with Young Money for their Fiver
Challenge which encourages the development of entrepreneurial
skills for children, while raising money for local causes. More
than 6,000 children have already signed up for this digital
challenge through their schools and we hope to see many more
joining them by the end of the year.
Mike said: "I am very proud of the efforts our colleagues have
made to improve the lives of others. As a purpose led business, we
will continue to work hard to help our communities deal with the
many challenges they face. This has included helping communities
during the floods across Wales in February and providing support to
projects during the pandemic crisis.
"Our people are our greatest asset and we strive to create a
friendly, open and inclusive culture. It was wonderful to be
acknowledged once again as one of the best places to work in the UK
by Great Place to Work(R) . Our colleagues continue to make us
stand out in the sector and are renowned for their warmth, personal
approach and empathy."
Principality had signposted an expected reduction in profits in
2020 due to continued investment in technology to transform its
core mortgage and savings operations. However, in addition, and in
response to the economic downturn, provisions of GBP17.9m have been
put aside for potential loan losses that may arise. Whilst no
significant credit losses have been incurred to date, it is
recognised that some customers may experience financial
difficulties over the next few years. Current accounting standards
require estimated losses to be provided for at an early stage,
taking into account economic forecasts of factors including
unemployment levels and residential and commercial property
prices.
Principality remains very well capitalised but this prudent
approach has had a significant impact on results for this interim
period, resulting in an underlying loss before tax of GBP3.5m (six
months to 30 June 2019: profit of GBP21.2m) and statutory loss
before tax of GBP6.4m (six months to 30 June 2019: profit of
GBP19.8m).
Mike explained: "As a mutual, member-owned building society, our
aim has never been to maximise profit but to focus on the long-term
future of the Society. We have taken a cautious approach in setting
what we consider to be an appropriate level of provision against
possible future loan losses, and have done so in the knowledge that
our underlying financial strength means we are well equipped to
respond to any further economic challenges we are likely to face in
the months and years ahead. Our capital and liquidity remain strong
and provide a solid platform for growth and future investment in
our business.
"Overall trading performance has been broadly in line with our
expectations, notwithstanding the significant impact of the
pandemic on the markets in which we operate. Our retail mortgage
lending increased by GBP118.7m in the first six months of this
year, taking total retail lending over GBP8bn for the first time,
despite the UK housing market coming to a standstill for the best
part of four months.
"We have successfully weathered many financial crises in our
160-year history. We have always supported our members and will
continue to do so as we navigate our way through these current
unprecedented circumstances. But we have also looked to the future
and continued our programme of investment in technology to further
improve our award-winning service and broaden the range of products
we are able to offer to our members. Providing a safe and secure
home for our members' savings is fundamental to the ongoing success
of our business and our aim is to continue to build scale, strength
and resilience for the future, notwithstanding the fact that
short-term profitability will be impacted."
Looking to the second half of the year Mike added: " We expect
the economic environment to remain challenging through the
remainder of 2020 and beyond as the impact of the coronavirus
pandemic continues to be felt. In these difficult circumstances, I
want to assure members that Principality remains a safe home for
their savings, and has the strength and resilience to withstand the
turbulence we are all presently facing. Our long term priorities
remain unchanged and, while our immediate focus remains on helping
members through these uncertain times, we remain committed to
developing and growing our business in a safe and secure way."
KEY PERFORMANCE INDICATORS
-- Total assets of GBP10.5bn (31 December 2019: GBP10.7bn)
-- Retail mortgage balances of GBP8,112.3m (31 December 2019: GBP7,993.5m)
-- Savings balances have remained consistent at GBP7.6bn (31 December 2019: GBP7.6bn)
-- Net retail mortgage lending for the first six months of the
year of GBP118.7m (30 June 2019: GBP285.6m)
-- Statutory loss before tax of GBP6.4m (30 June 2019: profit of GBP19.8m)
-- Underlying loss before tax of GBP3.5m (30 June 2019: profit of GBP21.2m)
-- Strong capital with a Common Equity Tier 1 ratio of 24.48% (30 June 2019: 24.73%)
-- Customer Service Net Promoter Score of 81.2% (30 June 2019: 80.8%)
-- Net interest margin of 0.99% (30 June 2019: 1.15%)
Notes to Editors
The full interim report can be viewed via the following link:
https://www.principality.co.uk/about-us/your-principality/financial-reports
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 GBP10.5 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
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END
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