TIDM10AI
RNS Number : 0850E
Principality Building Society
07 February 2018
Principality Building Society Annual Results Announcement for
the year ended 31 December 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 GBP917m and
pre-tax profits of GBP57.6m.
In 2017 Wales' largest building society has grown its assets to
GBP9.3bn, 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 GBP2.5bn for the first time in Principality's history;
-- Net residential mortgage lending grew by GBP917m;
-- Helped more than 5,000 first time buyers get on to the property ladder;
-- Savings balances also grew strongly and now stand at over GBP6.5bn (2016: GBP6.1bn);
-- Total assets grew to GBP9.3bn (2016: GBP8.3bn);
-- 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 GBP57.6m (2016: GBP50.3m);
-- 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 GBP134,000 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."
Performance
Gross mortgage applications reached GBP2.5bn 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 GBP9.3bn and
this has been achieved by a strong retail lending performance.
Overall pre-tax profits increased to GBP57.6m 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 GBP917m. 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 GBP399m 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 GBP17.9m.
Commercial plays a significant role in Wales through its lending
activities including affordable housing; for example, last year it
announced GBP50m 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 GBP17.1m and has
consistently delivered strong service to customers.
"It is also testament to our financial strength and brand that
we were able to secure GBP475m of wholesale funding in the year
through the issuance of our fourth residential mortgage backed
securities issuance and GBP300m 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 GBP134k
for Principality's three chosen charity partners (Llamau, School of
Hard Knocks and Cancer Research Wales). The Society has also
invested over GBP90k 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."
Outlook
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."
S
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 18 agencies in Wales and the
borders.
-- Principality is the 6th largest building society in the UK.
-- The Society has assets of over GBP9 billion.
-- www.principality.co.uk
Consolidated income statement
for the year ended 31 December 2017
2017 2016
GBPm GBPm
Continuing operations
Interest receivable and similar income 214.2 229.1
Interest payable and similar charges (88.3) (104.2)
------- -----------
Net interest income 125.9 124.9
------- -----------
Fees and commission receivable 7.1 9.0
Fees and commission payable (1.0) (0.9)
------- -----------
Net fee and commission income 6.1 8.1
Other operating income 1.4 1.6
Other fair value gains 4.3 1.6
------- -----------
Net operating income 137.7 136.2
Administrative expenses (76.4) (74.2)
Depreciation and amortisation (13.2) (7.9)
------- -----------
Operating expenses (89.6) (82.1)
Impairment provision release 10.0 2.7
Provision for other liabilities and
charges (0.5) (6.5)
------- -----------
Operating profit and profit before
taxation 57.6 50.3
Taxation expense (14.1) (11.2)
Profit for the year 43.5 39.1
------- -----------
Consolidated statement of financial position as
at 31 December 2017
2017 2016
GBPm GBPm
Assets
Liquid assets 1,320.0 1,116.8
Derivative financial instruments 29.6 30.4
Loans and advances to customers 7,864.1 7,073.9
Fixed and other assets 48.9 60.1
Total assets 9,262.6 8,281.2
-------- --------
Liabilities
Shares 6,563.8 6,165.2
Borrowings 2,035.9 1,468.8
Derivative financial instruments 29.2 45.7
Other liabilities 46.8 53.8
Subscribed capital 66.5 69.3
-------- --------
Total liabilities 8,742.2 7,802.8
General reserve 519.3 476.0
Other reserves 1.1 2.4
-------- --------
Total equity and liabilities 9,262.6 8,281.2
-------- --------
Key results and ratios 2017 2016
% %
Net interest margin 1.44% 1.57%
Cost income ratio 65.0% 60.3%
Management expense ratio 1.02% 1.04%
Common equity tier 1 capital ratio 26.14% 23.47%
Leverage ratio 5.32% 5.47%
Liquid assets as a percentage of
shares and borrowings 15.36% 14.63%
This information is provided by RNS
The company news service from the London Stock Exchange
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