Delivering Member value today while building long-term strength

Principality Building Society – the UK’s sixth largest and Wales’ leading customer-owned business, today announces its half year results for 2026.

Despite a challenging economic backdrop, the Society reports solid results, as it lays the foundations to invest in long term transformation to serve the next generation of Members.

In the first five months of 2026, the Society has returned £33m in value to its Members through above market savings rates.  

Performance highlights:

• Our total assets have increased to £14.1bn (December 2025: £13.9bn) 
• Net interest margin has increased: 1.27% (June 2025: 1.17%) 
• Our core business remains strong, with net operating income: £86.2m (June 2025: £81.5m)
• Robust retail mortgage balances: £11.3bn, up by £0.2bn (December 2025: £11.1bn) 
• Savings balances remain stable: £11.5bn (December 2025: £11.6bn) 
• Statutory profit before tax: £19.6m (June 2025:  £21.9m) 
• Underlying profit before tax is resilient: £22.2 million (June 2025: £22.5 million) 
• Strong capital with increased Common Equity Tier 1 ratio: 19.2% (December 2025: 18.7%) 
• Customer experience has increased, rising to: 73.8 (December 2025: 70.8) 
• Broker experience remains strong: 83.6 (December 2025: 84.1).

 

Iain Mansfield, Chief Executive Officer of Principality Building Society said: “I am pleased to report that Principality has delivered a solid set of results in the first half of 2026, as we seek to deliver on our purpose of building a society of savers, where everyone has a place to call home.

The first half of the year has been dominated by continued geopolitical uncertainty, with conflict in the Middle East creating volatility across financial markets and influencing expectations for future Bank of England base rate changes. These external forces have contributed to a challenging operating environment for households and businesses across the globe.

Despite this backdrop, the Society delivered a robust financial performance, while maintaining a strong capital and liquidity position, all while taking deliberate decisions that strengthen the Society for the long term.”

Our financial performance

Iain continues: “Strong and sustainable income is what allows us to continue investing in the future of the Society, while delivering value for Members today.

The Society's net interest margin increased to 1.27% (June 2025: 1.17%), demonstrating our commitment to commerciality and ability to manage and perform positively in a challenging operating environment.

The Society has continued to stay focused on cost management, in the face of inflationary challenges. As a result, our operating expenses have remained broadly stable year-on-year at £60.2m (June 2026) v £59.0m (June 2025) while our management expense ratio has remained stable, moving from 0.84% (December 2025) to 0.86%.

Despite the increase in net interest margin and a flat cost base, our underlying profit before tax remains resilient at £22.2 million (June 2025: £22.5 million), reflecting a £5.6m impairment charge in response to a weakening economic outlook. Our core business performance remains strong, with net operating income of £86.2m up by £4.7m (June 2025: £81.5m). Statutory profit before tax was £19.6m (June 2025: £21.9m), with the difference to underlying profit before tax reflecting fair value movements on certain assets and liabilities in response to changes in market rates.

We saw an uplift in our total assets, which now sit at £14.1bn (December 2025: £13.9bn). Our retail mortgages have grown by 2.1% since December 2025, despite a difficult trading environment (June 2025: 3.9%, December 2025: 5.1%).

I am pleased to share that we have maintained a strong capital and liquidity position during the first half of 2026, with a capital ratio of 19.2% (December 2025: 18.7%) and a liquidity ratio of 13.6% (December 2025: 13.6%).”

Lending: homes within reach

Iain continues: “For many, home ownership feels further out of reach than at any point in a generation, with high deposits, stretched affordability and rising housing costs and accessibility making it harder to get the keys to your first home.

In the face of a challenging market, we have listened to and responded to our brokers and customers feedback, which has meant that we have been able to take a more focused and distinctive approach to our lending, helping more people access finance responsibly.

We have amended our lending criteria and how we assess affordability, adding more flexibility and leading to better returns for the business. This means we can support more customers, with a broader range of needs, including those who may be underserved or overlooked by other providers. Broker experience remained strong at 83.6, reflecting the quality of service we provide to intermediary partners and the strength of our proposition in a competitive market (December 2025: 84.1).

During the first half of 2026, our mortgage balances increased by £0.2bn to £11.3bn (December 2025: £11.1bn), and we now support 89,867 homeowners (December 2025: 88,941).

While growth has been more measured than in previous years, this reflects the challenging trading environment as well as our deliberate focus on sustainable growth and supporting customers responsibly.

At a time when the average age of a first-time buyer continues to rise and affordability remains stretched; we also helped 3,195 people take their first step onto the property ladder during the first half of the year (June 2025: 4,033).

While this number is lower than in previous years, reflecting wider affordability pressures in the housing market, our focus remains on providing sustainable lending that helps people access home ownership while maintaining long-term value for the Society and its Members.

As proud winners of the What Mortgages Award 2026 for Best Building Society Customer Service, our lending goes further; adding a human touch to what is one of the biggest decisions someone can make: buying a home.”

Commercial Lending

Iain continues: “For more than 20 years, our Commercial Lending team has supported the delivery of affordable housing across Wales by funding the majority of Welsh housing associations. We are now broadening our reach by increasing our funding to housing associations based in England.

Our commercial lending book currently stands at £864m, alongside further commitments of nearly £300m that are expected to draw within the next 24 months. During the first half of the year, we committed £73m of new housing association lending (June 2025: £15m) and agreed funding to property developers that will fund the development of 352 new homes (June 2025: 55).

While the challenging market environment has resulted in a broadly flat commercial lending book since the beginning of 2026, our pipeline continues to demonstrate significant momentum across both England and Wales. This reflects the value of our long-standing relationships and our relationship-led model, which continue to support strong opportunities despite wider market challenges.

Earlier this year, we announced our £30 million partnership with North West-based Plus Dane Housing. This is our second housing association partnership in England and reinforces commercial lending as an important strategic growth area for the Society. Our commercial lending business continues to be award winning, taking home Lender of the Year at the Insider Media Awards.”

Savings: made simple

Iain continues: “Delivering value to Members is what sets the mutual sector apart. It’s fundamental to our operating model and goes hand in hand with our ability to lend.  For the first 5 months of 2026, we've paid savers 3.52% versus the market average of 2.82%, resulting in £33m of additional interest paid to our Members. In the same period last year, we paid an equivalent of £37m¹. 

After another busy Cash ISA season, spurred on by a competitive market and with changes to the allowance from next April, I’m delighted to share that customers continue to trust us with their long-term savings.

Overall, our Members entrust us with £11.5bn of savings as of June 2026, (£11.6bn December 2025) and in a highly competitive market, we have remained focused on attracting and retaining funding that supports the long-term strength of the Society, rather than purely pursuing balance growth. We continue to offer competitive rates to our Members. At the same time, our entrance into the covered bond market, provided the business with £500m of liquidity in the start of the year, allowing us optionality in how we manage our funds, allowing us to balance our liquidity with wholesale options and invest in the long term future of the business.

Against a backdrop of increasing pressures on household finances, making it simple for people to save remains a priority. Whether online, in the palm of your hand or in one of our branches dotted across communities in Wales and on the borders, we want Members to be able to engage with us in the way that suits them best.

That’s why, at our Annual General Meeting in April, I was delighted to announce our future intention to launch a new digital savings app. As the financial services provider with the largest branch presence in Wales, our new app will be designed to balance our physical and online services as a trusted, digital Society, allowing us the ability to offer Members choice on how they manage their finances.

Our customer experience score rose to 73.8 (December 2025: 70.8) reinforcing the value our Members place in our human approach. Our win for Best Building Society Savings Provider at the Moneyfacts Awards, and our double gold ribbons for saving and lending at the Fairer Finance Awards are a further testament to the value we continue to deliver for our Members.

Our profit powering our purpose

Iain continues: “The profit our business makes means we can make a meaningful and lasting impact in the communities we operate in. With the largest branch presence of any financial services provider in Wales, our presence matters.

During the first half of the year, almost £0.5m was distributed to causes that make a difference in communities across Wales, (June 2025: £0.4 million). At the same time, our partnership with Barnardo’s Cymru continues to demonstrate the collective action with our colleagues, Members and communities raising over £127,000 so far, supporting the work they do for children and young people across Wales.

The Society will continue this work, with further fundraising initiatives planned for the second half of 2026 – while matching donations up to £150,000 each financial year, helping to increase the impact of every pound raised.”

Looking ahead

Iain continued: “Thank you for your continued support and the trust you put in Principality. Our job is to ensure that this business remains competitive and relevant, for you today and for the next generation of Members.

It’s a pivotal time for your Society. The first half of 2026 has been about putting the plans in place for the future while also strengthening our foundations to enable the transformation needed to ensure we remain relevant in a rapidly changing world. Looking ahead across the next 18 months, the macroeconomic environment is becoming more difficult to predict, though we’ll continue to ensure we remain steadfast on delivering our purpose, creating a society of savers where everyone has a place to call home.”

Iain Mansfield

Chief Executive Officer

6 August 2026

 

¹Source: CACI’s CSDB, Stock, January– May 2026. January– June 2025 (3.98% vs. 3.17%) due to the heightened interest rate environment.