Principality lending exceeds £5bn

Principality Building Society has today announced that its lending to home owners has exceeded £5bn for the first time.

Related topics:  Finance
Warren Lewis
5th August 2015
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This increased mortgage lending has also been strengthened by Wales’ largest building society helping more than 1,100 first-time buyers get on to the property ladder in the first six months of the year.

The group has three key businesses; the Building Society, which has 53 branches and 18 agencies around Wales and the borders, Nemo Personal Finance and Principality Commercial, its commercial lending division, which have continued to perform well.

Graeme Yorston, Group Chief Executive of Principality Building Society, said: “I am delighted to report another very strong set of results for the Principality Group for the first six months of 2015, where we have seen our strategy of growing the core business continuing to deliver.

In the first half of the year we have once again grown our lending to customers buying their own home, contributing to the overall increase in lending to home owners which now exceeds £5bn for the first time in the Society’s 155 year history. Crucial to this and to the market as a whole, has been lending to first-time buyers where we have consistently supported people onto the housing ladder. As house prices have stabilised and low interest rates have been seen across the market a greater level of affordability has returned, enabling us to help over 1,100 first-time buyers move into their first home in the first six months of the year.”

Key Performance Highlights
 
•    Residential mortgage lending exceeds £5bn for the first time in the Society’s history
•    Continuous support to homeowners has led to a growth in residential mortgage lending in the first six months of the year of £233.4m (30 June 2014: £161.2m)
•    Principality was the recipient of Wales’ Responsible Large Business Award for 2015 in the Business in the Community Wales Responsible Business Awards 2015
•    87.4% mortgages funded by savers (31 December 2014: 91.4%)
•    Pre-tax profits have increased by £2.7m to £23.2m compared to the same period last year (30 June 2014: £20.5m excluding the impact of the £10.1m one off benefit from a change in the pension inflation assumption)
•    Strong capital ratios with a Common Equity Tier 1 ratio of 19.0%1 (31 December 2014: 18.2%)
•    Net interest margin 1.84% (30 June 2014: 1.84%)
•    Arrears levels remain consistently low, with the percentage of cases currently standing at 0.53% (31 December 2014: 0.74%)2

Graeme added: “The Group’s trading performance has been strong in the first half of the year. Excluding the impact of the pension changes last year, profit before tax has increased by £2.7m. Our profit for the first six months of the year has meant that we have been able to continue to grow our capital base, which provides vital protection for our Members from any severe market downturns, as well as providing us with important funding for our investment programme as we seek to transform our business into an organisation that will be relevant for both current and future members.

Savers have continued to see interest rates fall which is an outcome of how the market is currently operating. Despite ongoing interest rate reductions from many of our competitors, we at Principality have done our best to try and support our loyal customers by minimising the impact of these wherever we can. Our lending programme continues to be funded by our savers and whilst we may have to take advantage of some of the wholesale funding opportunities that exist in the market to remain competitive, we do not envisage our model changing substantially.”

Graeme concluded: “I am delighted that all three businesses have made significant contributions to the Group’s performance in 2015. The personal finance sector is seeing increased competition with new entrants and existing businesses competing for trade in a way that has not been previously experienced. Despite this, the Nemo business has performed well and delivered consistent growth in profits compared to the same period in 2014. Arrears levels remain low and the business is very well placed to respond to changes in regulation in the early part of 2016 with significant investment in technology, people and processes. We have strengthened the management team in the business and I have been delighted with the way that Nemo has responded to the challenges.

Our Commercial lending division has also had a very successful first six months with improving profitability. This has been a challenging market for a number of years which we have weathered well and as the economy continues to show signs of recovery I would expect a good business outturn for the remainder of this year.

I am very confident in a continuing bright future for the organisation as we remain focussed on delivering strong results backed up with excellent service and an investment programme in the business that will ensure that it is relevant now and for many years to come.”

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