TIDMZT11
RNS Number : 6516I
Principality Building Society
09 August 2023
Principality Building Society Interim Results Announcement for
the six months to 30 June 2023
Principality Building Society will continue to invest profits to
support members, communities, and colleagues through turbulent
economic times, after it announced a strong performance for the
first half of 2023.
Better Homes
Julie-Ann Haines, CEO at Principality Building Society said:
"The first half of 2023 has been another challenging period for our
members, colleagues, and communities. Core inflation has remained
stubbornly high, leading to further Bank of England base rate
rises, which has added to the cost-of-living pressure on people's
finances.
"I am pleased to announce a strong performance for the first
half of the year whilst we have continued to support our members
and communities through these turbulent economic times.
Principality is a purpose-led, member owned organisation. Our
ambition to have impact beyond our scale and to grow the business
sustainably for future generations is making real progress. We have
delivered mortgage and savings growth in the last six months,
whilst improving our efficiency with better online and branch
services.
"Our member owned, sustainable business model, responsible
approach to lending and conservative interest rate risk management
have enabled us to balance the needs of savers and borrowers while
also keeping the Society safe and secure for the long term. While
others are closing branches, we remain committed to the high
street, helping to provide increased choice and services for
members, customers, colleagues, and our broker partners."
The excellent support Principality has given to its members led
to it being voted Best Building Society for Customer Service by
What Mortgage for the sixth consecutive year.
In February, the Commercial team issued a GBP50m loan to Pobl,
one of the largest housing associations in Wales, to support the
creation of more affordable housing across Wales. This led to the
Commercial team winning the Funder of the Year award at the Insider
Wales Property Awards.
Secure Futures - Society of savers
Julie-Ann said: "We want to provide our members with competitive
savings rates so we can create a society of resilient savers.
Savings performance has been strong; we have increased the number
of savers we have to over 415,000 with over 75,000 customers saving
regularly. This is the result of amazing commitment from all our
colleagues who worked tirelessly to ensure we put savings members
at the heart of our response to recent Bank of England rate
increases."
Around 1% out of the 1.5% in BOE rate rises in the first half of
the year were passed on to our savers and our average time to
increase savings rates after a base rate increase has halved from a
month to 15 days giving members value more quickly.
On average we have paid savers 2.46% versus the market average
of 1.87% for the first five months of 2023* resulting in the
equivalent of an additional GBP10m in interest to our variable rate
savers.
(*Source: CACI's Current Account and Savings Database, Stock,
Jan - May 2023)
Fairer Society - Greater social impact for communities
Principality has the ambition to set aside up to 3% of its
annual profit for social purpose, and as part of that commitment,
in the first half of this year, invested 1.4% (GBP569,000) of its
underlying profits in community grants through our Future
Generations Fund.
Principality helped to financially educate almost 33,000 school
children and young people in the past six months, whilst donating
GBP86,000 to charity partners Ty Hafan and Hope House Ty Gobaith
children's hospices.
The Society is committed to diversity and inclusion, and its
excellent colleague networks have made big strides in recent years.
One example is how its Pride network has reached out to businesses
across Wales, to demonstrate how it can work collaboratively in the
private sector to help achieve Welsh Government's LGBTQ+ Action
Plan.
Strong Financial Performance
Underlying profit reached GBP39.1m (June 2022: GBP26.1m) whilst
statutory profit before tax was GBP41.0m (June 2022: GBP31.0m).
Mortgage balances are GBP8.7bn (December 2022: GBP8.2bn) and
savings balances are now GBP8.5bn (December 2022: GBP8.1bn).
The rising interest rate environment underpinned improved net
interest margin of 1.69% (June 2022: 1.32%).
Julie-Ann added: "We have benefitted from our historic long-term
interest rate risk management decisions which have allowed us to
offer highly competitive rates to savers and protect variable rate
mortgage customers from the full impact of the Bank of England
Rate.
"Our capital and liquidity remain strong and enable a platform
for future growth and investment in our business. Providing a safe
and secure home for our Members' savings is fundamental to the
ongoing success of our business."
Outlook
Julie-Ann added: "There is no doubt that economic conditions
will remain challenging for many people in the medium term, with
some further interest rate rises expected from the Bank of England
in its attempts to ease inflationary pressure.
"However, our long term ambition remains unchanged; to create
better homes for members, help members to secure their futures with
competitive saving rates, as well as trying to create a fairer
society for the communities we operate in. In doing this, we will
build more scale, strength, and resilience for the future."
KEY PERFORMANCE HIGHLIGHTS
-- Total assets of GBP11.6bn (December 2022: GBP11.3bn)
-- Retail mortgage balances of GBP8.7bn (December 2022: GBP8.2bn)
-- Savings balances of GBP8.5bn (December 2022: GBP8.1bn)
-- Net retail mortgage lending for the first six months of the
year of GBP455.3m (June 2022: GBP99.3m)
-- Statutory profit before tax of GBP41.0m (June 2022: GBP31.0m)
-- Underlying profit before tax of GBP39.1m (June 2022: GBP26.1m)
-- Strong capital with a Common Equity Tier 24.85% (June 2022: 32.01%)
-- Net interest margin of 1.69% (June 2022: 1.32%)
-- Net Promoter Score 83.1 (June 2022: 80.9)
Ends
Notes to editors
About Principality Building Society
-- Formed in 1860, Principality is Wales's largest building society.
-- The Society is committed to supporting the communities of
Wales, with 53 branches and 17 agencies in Wales and the
borders.
-- Principality is the 6th largest building society in the UK.
-- The Society has assets of GBP11.6bn
-- Principality is committed to remaining a mutual organisation.
-- www.principality.co.uk
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