Principality. Where home matters.
7 February 2018
Principality Annual Results 2017
Principality lending more than ever before
Principality Building Society has today announced a strong set of annual results, with net mortgage lending growing by £917m and pre-tax profits of £57.6m.
In 2017 Wales’ largest building society has grown its assets to £9.3bn, as its growth strategy continues to support the priority of being a strong, resilient and safe home for its Members’ savings.
Key Performance Highlights
- Gross mortgage applications of £2.5bn for the first time in Principality’s history;
- Net residential mortgage lending grew by £917m;
- Helped more than 5,000 first time buyers get on to the property ladder;
- Savings balances also grew strongly and now stand at over £6.5bn (2016: £6.1bn);
- Total assets grew to £9.3bn (2016: £8.3bn);
- Customer service has once again delivered and the Society’s net promoter score stood at 74.8% for the year (2016: 72.7%);
- Pre-tax profits for the year of £57.6m (2016: £50.3m);
- Net interest margin 1.44% (2016: 1.57%);
- Strong capital ratios with a Common Equity Tier 1 ratio of 26.14% (2016: 23.47%);
- Colleagues raised £134,000 for charity which includes matched funding by the Society.
Steve Hughes, Chief Executive at Principality Building Society, said: “We have continued to provide a safe home for our Members’ savings, whilst providing great customer service. We have built financial resilience through our strong residential mortgage growth and robust profitability.
“We are a proud mutual organisation that will continue to focus on running the business in the long term interests of our Members. We have an ambitious growth strategy with a clear focus on transforming our mortgage and savings business. To achieve this it means that headline profitability is likely to fall in the next few years as we invest to future proof our organisation for existing and future generations of Members.
“Our strong performance means we can invest in our technology, our branches and our people to meet the changing demands of our consumers. Digital technology is evolving at a rapid pace. Our Members have told us they want flexibility and to have more choice in how they do business with us.
“Improvements to our technology will complement our outstanding personal service. Our Members always tell us of the importance their branch has in their local communities and that our colleagues play a valuable role.
“The transformation of our business has begun in earnest. We have already improved our online service to complement our great branch network. Members are also benefiting from the rollout of our Principality Connected video conference service which means the equivalent of face-to-face interviews can take place anywhere throughout our retail network.”
Gross mortgage applications reached £2.5bn for the first time in the Society’s history, after a strong year of acquiring new and retaining existing mortgage customers.
Steve continued: “Our total assets have risen to £9.3bn and this has been achieved by a strong retail lending performance. Overall pre-tax profits increased to £57.6m reflecting robust margin and strong arrears performance, providing resilience and security for our Members. Our capital and liquidity is strong and provide a firm platform for growth and investment in our business.
“I am especially pleased that in the past year our net residential mortgage lending increased by £917m. Growing the residential mortgage business is important and benefits our Members through building a sustainable business. It provides us with the scale to allow us to invest for the future. I’m also proud that we have been able to help more than 5,000 first time buyers on to the property ladder in the past year.
“We have attracted an extra £399m in savings, proving our ability once again to offer competitive interest rates and service to Members. We launched our maturity products last summer to allow us to reward existing customers. As a result our retention rates have improved and feedback from Members has been positive.
“Our Commercial lending business is important in delivering financial dividends to our Members. Principality Commercial has again performed well, contributing a pre-tax profit of £17.9m. Commercial plays a significant role in Wales through its lending activities including affordable housing; for example, last year it announced £50m of loans for housing associations.
"Nemo, our second charge loans business, stopped offering new customer loans in 2016. It has again made a meaningful contribution to the overall results with a pre-tax profit of £17.1m and has consistently delivered strong service to customers.
“It is also testament to our financial strength and brand that we were able to secure £475m of wholesale funding in the year through the issuance of our fourth residential mortgage backed securities issuance and £300m for our first unsecured issuance since 2006. It’s great to see the backing of institutional investors in the Principality name and also to receive recognition from our rating agencies, resulting in a Moody’s upgrade.”
Serving our communities
Principality Building Society prides itself in supporting its local communities and helping them prosper. Colleagues at the Society have yet again put in considerable effort to raise £134k for Principality’s three chosen charity partners (Llamau, School of Hard Knocks and Cancer Research Wales). The Society has also invested over £90k to support 131 community groups and school projects across Wales.
Steve said: “We should all be proud to continue to help prevent homelessness amongst young people and women, support research into cancer cures and treatments and build financial capability skills. We have developed great relationships with schools in our communities in the past year. I am so proud of the efforts our colleagues made to deliver financial education lessons to more than 1,000 primary school children across Wales. It makes a real difference to people’s lives and we will continue to invest in our communities.
“Our culture, values and continued investment in our colleagues is crucial to ensuring the Society moves forward. Thanks to the superb efforts of our colleagues in 2017 we received Recommended Provider status by consumer champion Which? for our savings accounts. It would be impossible to achieve such recognition without the fantastic work of all our colleagues. We have had great feedback from our Members on how they value our excellent personal service.”
Looking ahead to the next year, Steve said: “We are well placed to continue to grow and invest in the business to improve our member proposition. The Bank of England has predicted that there will be further Base Rate rises in the next few years and Brexit continues to dominate headlines and people’s thoughts.
“Principality’s balance sheet is strong and we are confident in our ability to withstand economic headwinds. It also enables us to offer some of the most competitive products on the High Street. The protection of our Members’ interests is of paramount importance to us. We will continue to put our Members first, provide them with a stand out experience, whilst investing in our business for long term sustainability.”