Commenting on Principality’s business performance, Peter Griffiths, Group Chief Executive, said; ‘Principality continues to prosper in a difficult marketplace and has once again delivered a very robust set of results, demonstrating its resilience in an environment where wider economic challenges dominate the current agenda.
Our profitability, capital position and funding levels remain strong and we face the future with optimism notwithstanding current market and regulatory pressures.’
Key Performance Highlights
- Strong half year pre-tax profits of £14.8m
- General Reserves increased by £10.4m
- A robust net interest margin of 1.79%
- Loan loss provisions of £59.6m
Group Business Overview
All businesses performed well during the first half of the year and Principality’s diversified business model has continued to deliver expected returns.
Further investment has been made in the property related businesses with an ambition to grow Peter Alan Estate Agency Lettings service. In addition the recent launch of pa Black, a new estate agency brand aimed at marketing and selling higher value properties, has delivered some very encouraging initial results.
All lending books have performed well across the core Society, Nemo Personal Finance and Principality Commercial. Overall returns are improving and impairment remains at acceptable levels with arrears and houses in possession at lower levels than 12 months ago.
Responding to Market and Regulatory Issues
Gross and net lending levels across the sector remain low with little sign of sustained recovery and credit conditions and capital markets remain nervous in view of wider European contagion issues.
Despite these difficult conditions the Group’s residential mortgage book has grown by 2.8% since the year end, whilst prudently ensuring that all loans remain fully funded by Member savings. This approach has provided strong insulation from current dislocation in wholesale funding markets.
Peter continued, ‘Whilst growth continues to be constrained due to current market and regulatory pressures, we remain ever conscious of the impact tight credit conditions have on home ownership aspirations and the knock on affect on the current housing crisis.
There is undoubtedly a major structural shift in home ownership which continues to decline with the overall level of owner occupied households now at the same level evident some 20 years ago.
The Society continues to seek to deliver new housing solutions for its Welsh based Members, believing passionately that an innovative approach to housing solutions in Wales will help drive the economic and social agendas.’
Customer Trust and Satisfaction
In an environment where consumers feel financially squeezed and where a trust deficit is evident leading to confusion over who to turn to for financial advice, Principality continues to attract strong numbers of new members and positive growth in its savings balances.
Peter continued, ‘Our healthy financial performance has enabled us to continue to heavily invest in the future of the business particularly in our customer facing services. The expansion of our branch and agency network and the launch of new technology including a new website demonstrate our commitment to service excellence and underpin our outstanding customer satisfaction performance.’
A recent customer service survey by Which? placed Principality Building Society in the top 5 banks and building societies with the most satisfied savings customers.
Peter concluded, ‘Service excellence matched with competitive products and our strong brand, history and provenance, leave us well placed to compete in what is likely to continue to be a rapidly changing and challenging landscape.’
Read our financial reports, including the Group Interim results for six months to 30 June 2011.
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