TIDM10AI
RNS Number : 4795C
Principality Building Society
23 February 2022
Principality Building Society Annual Results Announcement for
the year ended 31 December 2021
Principality will reinvest strong profit in its branches and
technology
Principality has posted strong annual results for 2021, as it
focused all its efforts on supporting members, making a positive
impact on society, and supporting its award-winning colleagues.
Thriving communities
CEO Julie-Ann Haines said: "It has been another challenging year
for our colleagues, our customers, and our communities. Starting
the year in national lockdown, I have been struck by how our
colleagues have maintained their focus and commitment to make
Principality a successful and welcoming Society. Our Society
continues to look after our members' savings and mortgage needs,
and we have made great progress as we continue to deliver on our
strategic ambitions.
"It has been a very difficult period for the high street but as
competitors continue to close their branches, I am proud that we
have the largest physical branch presence of any financial services
brand in Wales and the borders. Earlier this month we made a
promise to maintain our branch presence in all of the towns and
cities we currently operate in Wales and England until 2025 at
least, giving our members, colleagues and communities
certainty.
"As a major business in Wales, we want our towns to thrive and
believe financial service organisations have a role to play in
ensuring towns prosper, and consumers have access to cash. Our
branches will remain open so long as members continue to value and
use them so they will be there for our future generations."
Better Homes
Principality continued to help first-time-buyers with the number
of applications rising, with 2,954 people able to get on to the
property ladder despite a much more challenging housing market.
Julie-Ann commented: "As a result of the pandemic and government
intervention, we have seen large increases in house prices and so
we remain committed to ensuring we put more effort into helping
people owning their own home. This included the launch of our First
Home Steps app specifically online support for first time buyers,
as well as offering a range of mortgages aimed at newly qualified
professionals.
"Mortgage customers were given continued support with payment
holidays, and we made sure the needs of our members were met during
uncertain times for everyone."
For mutual benefit, helping to build a fairer society
In partnership with Young Enterprise, Principality proudly
sponsored the Fiver Challenge across Wales for the second
consecutive year and it was great to see over 3,000 Primary pupils
set up their own businesses with GBP5 of investment, lots of
learning, a big environmental focus and some great profits too.
Since 2020, the building society has also supported 2,000 young
people in Wales with financial education qualifications from the
London Institute of Banking and Finance, and announced it will
invest GBP100,000 to continue this support.
Julie-Ann said: "We want to ensure we continue to be a
responsible, sustainable business, focused on the future. Whilst we
will continue to invest in technology to benefit how your society
is run, we will increase investment to help more first time buyers
get a home, help more people to live in carbon neutral homes,
ensure our members have a choice in how we run their building
society, and create a much fairer society for the benefit of our
customers, colleagues and communities.
"For example, we are focusing on our sustainability as an
organisation, and have set an ambitious target to be carbon net
zero by 2030. Our award-winning commercial team introduced a green
loan fund to support developers who are building carbon neutral
homes across Wales. We're also partnering with Sero, a Welsh-based
fintech, to identify how we can support our members who want to
improve the sustainability of their homes."
Secure Futures
In 2020 Principality increased its provisions for potential
future loan losses because of the economic uncertainty caused by
the pandemic. Over the last year the economic outlook has gradually
improved, and is more optimistic for 2022. The housing market
exceeded expectations during 2021 and employment is more stable
than expected after furlough ended, which has resulted in a
reduction in the overall level of provisioning. An underlying
profit before tax of GBP54.4m (2020: GBP24.1m) and statutory profit
before tax of GBP64.0m (GBP19.9m).
Julie-Ann said: " 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.
This year we have been busy implementing a new mortgage system that
will benefit brokers and customers alike by improving the speed of
our application process, and meet more of our customer needs
through offering a wider range of products. Our profits are strong
and will use this to invest in our technology, branches and
colleagues to maintain our outstanding customer service. "
Outlook
On the outlook for 2022 Julie-Ann added: "The economic
environment looks to be more optimistic next year and beyond,
although there are financial pressures such as rising energy bills,
the cost of living, and national insurance increases to for our
members to contend with in the coming year. Our focus remains on
helping members to get a home and stay in a home for longer, to
become a much more purpose-led and sustainable business, and to
honour our commitment to developing and growing our business in a
safe and secure way. Our members' expectations of us are changing.
So we will continue to adapt, invest and improve so that we remain
relevant for the long term, and ready to face future
challenges."
KEY PERFORMANCE INDICATORS
-- Total assets GBP10,907.9m (2020: GBP11,120.9m)
-- Underlying profit before tax GBP54.4m (2020: GBP24.1m)
-- Residential mortgage balances - GBP8,033.3m (2020: GBP8,175.7m)
-- Savings balances - GBP7,934.8m (2020: GBP8,187.4m)
-- NPS - 80.5% (2020: 79.8%)
-- Capital (CET1 ratio) - 33.99% (2020: 27.1%)
-- % of mortgages funded by savers - 89.4% (2020: 88.9%)
-- 8(th) UK's Best Workplaces(TM) 2021 (11(th) 2020)
-- The Society is committed to supporting the communities of
Wales, with 53 branches and 14 agencies in Wales and the
borders.
Consolidated income statement for the year ended 31 December
2021
2021 2020
GBPm GBPm
Continuing operations
Interest receivable and similar income 198.7 205.6
Interest payable and similar charges (69.5) (97.0)
--------- -----------
Net interest income 129.2 108.6
--------- -----------
Fees and commission receivable 3.9 4.1
Fees and commission payable (1.8) (2.1)
--------- -----------
Net fee and commission income 2.1 2.0
Other operating income 0.8 0.7
Other fair value losses 9.6 (4.1)
--------- -----------
Net operating income 141.7 107.2
Administrative expenses (79.8) (70.9)
Depreciation and amortisation (10.8) (9.0)
Other impairment losses (2.5) -
--------- -----------
Operating expenses (93.1) (79.9)
Impairment provision release/(charge) 15.4 (9.1)
Provision for liabilities - 1.7
Operating profit and profit before taxation 64.0 19.9
Taxation expense (15.2) (4.0)
Profit for the year 48.8 15.9
--------- -----------
Consolidated statement of financial position
as at 31 December 2021
2021 2020
GBPm GBPm
Assets
Liquid assets 1,887.9 1,807.9
Derivative financial instruments 52.8 23.7
Loans and advances to customers 8,883.3 9,204.9
Fixed and other assets 83.9 84.4
Total assets 10,907.9 11,120.9
--------- -----------
Liabilities
Shares 7,943.8 8,187.4
Borrowings 2,262.3 2,200.1
Derivative financial instruments 24.7 106.2
Other liabilities 30.8 32.6
Total liabilities 10,261.6 10,526.3
General reserve 645.5 593.4
Other reserves 0.8 1.2
--------- -----------
Total equity and liabilities 10,907.9 11,120.9
--------- -----------
Key results and ratios 2021 2020
% %
Net interest margin 1.17% 1.00%
Cost income ratio 70.5% 71.8%
Management expense ratio 0.84% 0.73%
Common equity tier 1 capital ratio 33.99% 27.10%
Leverage ratio 5.56% 5.14%
Liquid assets as a percentage of shares and
borrowings 18.5% 17.4%
ENDS
Notes to Editors
-- Formed in 1860, Principality is Wales's largest building society.
-- The Society is committed to supporting the communities of
Wales, with 53 branches and 14 agencies in Wales and the
borders.
-- Principality is the 6th largest building society in the UK.
-- The Society has assets of just under GBP11 billion.
-- Principality is committed to remaining a mutual organisation.
-- www.principality.co.uk
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