21 February 2024

Principality Building Society’s strategy is delivering with record results, having a positive impact on its members and communities

Principality Building Society has announced a record-breaking performance for the year ending December 31, 2023. Against a backdrop of economic turbulence the Society made demonstrable progress towards its strategic vision helping more first-time buyers than ever before; growing its mortgage book to record levels and assisting more customers to start a savings habit.

Julie-Ann Haines, Principality Building Society’s Chief Executive Officer, emphasised the Society's core purpose: "As a building society, we’re focused on helping more people to have a place to call home and create a society of savers, and this year we have helped more homeowners and savers than ever before. We are also proud to commit up to 3% of our profit to impact positively the wellbeing of the communities we serve.”

Better homes, secure futures, fairer society

Julie-Ann continued, “The effects of a volatile economy, with inflation and interest rates remaining higher than we have seen in recent times, have impacted our members’ personal finances, limiting the aspirations of those saving for the future and making it harder for people to get on the housing ladder. In 2023 our strong set of results assisted a record number of first-time buyers, increasing to 8,134 in 2023 from 4,587 in 2022 and we increased the number of homes owned by members to 80,883, up from 75,425 in 2022. We’ve helped more people to save regularly and have continually offered savings rates that are above market average at 2.94% versus the average on the high street¹ of 2.31%. We’ve also focused on shortening the time it takes us to pass on interest rate rises, reducing from 30 days to 15, so customers benefit more quickly.”

Principality continues to put members at the heart of its strategy, increasing investment to ensure that it provides an industry leading service. As a result, its award-winning Net Promoter Score (NPS) has further improved in 2023 to 83.9 and it was voted Best Building Society for Customer Service by 'What Mortgage' for the sixth consecutive year.

Community Commitment

Principality's unwavering dedication to its customers is further embodied by its continued investment in local communities. While other banks and building societies have retreated from the High Street, Principality maintains a robust presence, with 53 branches and 15 agencies across Wales and the Welsh borders, and it has reaffirmed its commitment to operating at the heart of local communities until at least the end of 2025.

Principality invested £1.3m in impact work through its Future Generations Fund, increasing its support for youth and community groups, extending partnerships with charitable organisations, and making significant strides towards achieving its carbon net-zero operations by 2040, reducing its carbon footprint by 2,700 tonnes CO₂e.

Performance Highlights

Net interest margin rose to 1.52% in 2023 (2022 figure: 1.39%) driven by the higher Bank of England base rate. As a result, Principality reported an underlying profit before tax of £60.3m in 2023, up from £43.5m in 2022. Principality grew its retail mortgage book by £1.1bn to £9.3bn (2022 figure: £8.2bn) demonstrating a step-change towards its ambitious growth plans. The business is benefitting from investment made in previous years across its mortgage platforms, to continue to build resilience and adaptability amidst economic uncertainty.

Savings balances rose by £1.0bn in 2023 to £9.1bn (2022 figure: £8.1bn). The Commercial lending loan book also rose by £49m to a total of £811m, as a result of its landmark deal with Pobl Group², and Principality supported more Housing Associations and Commercial clients through a challenging period.

Julie-Ann Haines concluded, “Looking ahead, I’m confident in Principality's ability to navigate challenging political and economic conditions. While we anticipate ever changing times ahead, our business is well-positioned to invest further and grow for the benefit of our members, colleagues and communities. We remain dedicated to supporting our members' home ownership aspirations, providing competitive savings products and making a meaningful difference in the communities we serve. As we navigate the evolving landscape, we will continue to adapt and innovate to meet the changing needs of our members, while staying true to our core values and purpose."

Principality Building Society's year-end results attest to its security, stability, resilience, and unwavering commitment to its members and communities, positioning the Society for continued success in the years to come.

Key Points

• Total assets: £12.5bn (2022: £11.3bn)
• Underlying profit before tax: £60.3m (2022: £43.5m)
• Retail mortgage balances £9.3bn (2022: £8.2bn)
• Savings balances: £9.1bn (2022: £8.1bn)
• Capital (CET1 ratio): 21.8% (2022: 26.5%)
• Net Promoter Score: 83.9 (2022: 81.6)

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 15 agencies in Wales and the borders.
• Principality is the 6th largest building society in the UK.
• Principality is committed to remaining a mutual organisation.

Notes

¹ CACI's CSDB, Stock, Weighted Average Interest Rate for December 2022 - November 2023.

² For more information, please visit our article, Principality Commercial announce a landmark £50m loan for Pobl.

Published: 21/02/2024