Principality
Building Society Announces Strong Growth and Continued Investment
in Members and Communities
Principality Building Society has reported its
financial results for the first half of 2024, showcasing continued
strong growth driven by consistently providing good value to
members, providing additional support for customers and
communities, and delivering a strong financial performance in
challenging macroeconomic conditions.
Julie-Ann
Haines, Chief Executive Officer of Principality Building Society,
said: "The first six months of 2024 have been
another challenging period for our members, colleagues and
communities as the cost-of-living crisis continues to bite and
impact people's finances.
I am pleased to announce a strong performance
for the first half of the year whilst we have continued to support
our members and communities through these turbulent economic times,
building on two years of progress towards our strategy against a
testing backdrop of macroeconomic pressures; higher inflation and
political uncertainty.
Principality is a purpose-led, member-owned
organisation. Our ambition to have impact beyond our scale and to
grow the business sustainably for future generations is making real
progress. We have delivered strong mortgage and savings growth in
the last six months, whilst becoming more efficient through
improving our online and branch customer experiences.
Our member-owned, sustainable business model,
responsible approach to lending and conservative interest rate risk
management have enabled us to balance the needs of savers and
borrowers while also keeping the Society safe and secure for the
long term. That's why we remain committed to local communities in
Wales, not just through having the largest high street branch
presence of any bank or building society in Wales, but also through
championing access to cash, providing good interest rates,
volunteering, community engagement and sponsorships."
Better
Homes
Julie-Ann
Haines, said: "Core to our purpose is trying to
create a more accessible housing market, where there are more
affordable homes and it's easier for first-time buyers to get onto
the property ladder.
In the first half of the year, we've helped
more than 3,576 (June 2023: 3,304) first-time buyers purchase their
first home, and our net retail mortgage lending was £0.6bn (June
2023: £0.5bn). This takes us well on our way to our ambition to
support over 15,000 customers to buy their first home by
2030."
The excellent support Principality has given to
its members led to it being voted Best Building Society for
Customer Service by What Mortgage for the seventh consecutive year,
as well as the Best Medium Lender at the Legal & General
Mortgage Club awards and the Best Business Outcome Experian
award.
The final phase of the £100m Mill development
in Ely, Cardiff, is about to complete. This project, spanning seven
years, has built 800 homes, half of which offer discounted,
intermediate, or social rents. Principality's Commercial Lending
team supports 18 out of 33 housing associations in Wales, most
recently awarding £25m to Cardiff-based Hafod for 300 affordable
homes over five years, part of £80m in commitments for 2024, in
addition to a £50m loan to Pobl in 2023.
Secure Future
- Society of Savers
Julie-Ann
continued: "As the cost-of-living crisis
continues, more people are struggling financially. Those on the
lowest incomes have been affected the most and have the least in
savings. We want to provide our members with competitive savings
rates, so we can create a society of resilient savers. Savings
performance has been strong; we have increased the number of savers
we have to over 427,085 with over 72,519 customers saving
regularly, with savings through our branches up 5%.
We continue to invest in providing a better
experience for customers regardless of the channel customers choose
and have made significant improvements to our digital savings
journey and our new website will launch in the coming
weeks.
As a building society and a mutual, we're owned
by our members, not shareholders, so I'm proud to say that on
average, we've paid savers 4.00% versus the market average of
3.32%* for the first four months of 2024, resulting in the
equivalent of an additional £21m (0.68%) in interest paid to our
saving members."
*Source: CACI's Current Account & Savings Database (CSDB),
Weighted Average Interest Rate for January 2024 - April
2024.
Fairer
Society- Greater Social Impact for Communities
Julie-Anne
continued: "Principality has the ambition to
set aside up to 3% of its annual profit for social purpose, and as
part of that commitment, I'm pleased to say we plan to issue the
fourth iteration of our Future Generation Fund in the second half
of the year, which will support local community groups in our
heartland, with funding in excess of £0.5m. These funds
create impact in communities ensuring that the most disadvantaged
have more opportunities.
We also supported financial education for
24,567 school children and young people and donated £121,248 to our
charity partners Ty Hafan and Hope House Ty Gobaith children's
hospices through colleague and member fundraising.
The Society's commitment to diversity and
inclusion continues to shine through, I'm delighted that as a
result, Principality won the Financial Services Company of the Year
Award - for the National Centre for Diversity.
Our excellent colleague networks have made big
strides in helping the Society along on this journey. One example
is how the Pride network hosted local small businesses, colleagues
and their friends and family at Principality House ahead of the
25th annual PRIDE Cymru march, for which the Society was the
headline sponsor for the second year in a row."
Strong
Financial Performance
Principality's mortgage book growth of £0.6bn
has brought the Society's mortgage balance to £9.9bn (December
2023: £9.3bn). Savings balance has also grown £0.8bn to £9.9bn
(December 2023: £9.1bn). This brings Principality's total assets to
£13.5bn, £1bn higher than December 2023 (£12.5bn).
Following an expected reduction in Net Interest
Margin to 1.21% (December 2023: 1.52%), there was a corresponding
decrease in Underlying Profit to £20.1m (June 2023: £39.1m), while
statutory profit before tax was £22.4m (June 2023:
£41.0m).
Julie-Ann
added: "There is significant investment
underway to ensure the Society is fit for the future, with our
strong capital and liquidity positions providing a solid foundation
for future growth and investment, all for the benefit of members as
we seek to make it easier for them to do business with
us.
Providing a safe and secure home for our
Members' savings is fundamental to the ongoing success of our
business, just as it has been for the past 164 years."
Outlook
Julie-Ann
concluded: "Living in the homes we desire and
saving for the future we deserve is more difficult than ever
before. However, as inflation pressures begin to ease and we
anticipate a more stable political environment, the outlook is
becoming more optimistic. I'm confident that Principality is
well-positioned to leverage our strengths and meet our ambition to
have an impact beyond our scale.
Our long-term vision remains steadfast: to help
build a society of savers where everyone has a place to call
home.
Our strong financial performance means we can
continue to invest to protect the long-term relevance of the
Society to better meet the needs of our customers, colleagues and
communities."
ENDS
Key
Performance Highlights:
•
Total assets: £13.5bn (December 2023: £12.5bn)
•
Retail mortgage balances: £9.9bn (December 2023: £9.3bn)
•
Savings balances: £9.9bn (December 2023 : £9.1bn)
•
Statutory profit before tax: £22.4m (June 2023: £41.0m)
•
Underlying profit before tax: £20.1m (June 2023: £39.1m)
•
Common Equity Tier 1 ratio: 19.65% (December 2023
21.77%)
•
Net interest margin: 1.21% (December 2023: 1.52%)
•
Statutory Management Expense Ratio: 0.91% (Dec-23 0.99%)
To read our Interim Results Report in full,
click here.