TIDM10AI
RNS Number : 2537P
Principality Building Society
06 February 2019
Principality Building Society Annual Results Announcement for
the year ended 31 December 2018
Principality continues strong growth despite tough market
conditions
Principality Building Society has delivered another positive set
of annual results, with net retail mortgage lending growing by
GBP718m, while new savings balances increased by GBP426m. Total
assets are GBP9.7bn, and underlying profits for the year were a
healthy GBP43.8m in line with expectation, as the Society continues
to deliver on its priority of being a strong and safe home for
Members' savings.
Principality once again provided award-winning customer service,
with consumer champion Which? naming Principality top scoring
lender for customer satisfaction, as well as picking up national
awards from What Mortgage for best building society for customer
service, and Moneyfacts ISA Provider of the Year.
The Society's savings products have maintained their position as
one of the best and most competitive on the High Street. Despite a
low savings rate environment in 2018 Principality still delivered
an average rate to savers of 1.08%, compared with a market average
over the same period of 0.70%[1].
Steve Hughes, Chief Executive at Principality Building Society,
said: "We have made great progress in delivering on our business
growth strategy, despite increasing economic and political
uncertainty, as well as a very competitive mortgage and savings
environment which has caused downward pressure on margins. I'm very
proud that we have been able to help over 6,400 first time buyers
make their first steps on to the property ladder in the past year,
helping people to prosper. People see the value in our products and
that as a member-owned building society we are here to help them to
secure the home they want.
"We have grown our lending by more than GBP700m and are reaping
the benefits of our focused mortgage strategy which has built
strong relationships with brokers across the UK and seen investment
in our direct to consumer mortgage offering. In order to support
the growth in our lending, we have attracted an additional GBP426m
in savings. We have maintained our position as one of the best
savings providers on the High Street.
"Our Commercial team have once again performed well, bringing in
new lending worth GBP124m, and together with Nemo our second charge
loans business, has again made a meaningful contribution. I am
especially proud that the work we have done in Principality
Commercial is benefitting communities where affordable housing is
needed, such as their work at The Mill in Cardiff, and through our
social housing lending. Our lending has supported some great
initiatives in the residential, office and industrial sectors.
"As a mutual, member-owned building society, our aim is not to
maximise profit but to focus on the long-term future of the Society
by ensuring we invest in the business whilst offering competitive
rates to our savers and borrowers. Our profitability remains solid
and we will continue to ensure we add to capital to protect our
Members' interests.
Customer service and colleagues
"We have once again differentiated ourselves from our mortgage
and savings competitors by providing outstanding customer service.
Almost 80% of our Members said they would recommend Principality to
other people based on their level of satisfaction. It is all great
recognition for the work we do, not just with our Members but also
the service we provide for our intermediary partners.
"We will continue to invest in our people who embody everything
positive we stand for as a mutual business. Our colleagues live and
work in the communities they serve and have developed a strong
connection with them. We strive to be an inclusive business with
colleagues who are passionate about doing the right thing for
Members.
"The inclusive culture we have created led to us being named as
one of the top employers in the UK by Great Place to Work(R) . It
is testimony to the level of trust amongst our colleagues and the
effort they put in to make sure Members get the best possible
customer experience."
Changes for the future
Principality is in the middle of an investment programme so it
can offer current and future Members a flexible way of managing
their savings and mortgage needs.
Steve said: "Despite our excellent record on customer service,
we know we have to keep pace with evolving technology and our
Members will expect more of us. We have invested in our
infrastructure to improve the flexibility of our services, with
more than 100 colleagues working to move our technology forward. It
is a challenging but exciting period in Principality's history as
we look to secure the future of the business for our next
generation of savers and borrowers.
"We have been working with our Members by testing how we can
tailor our digital services to their needs, and internally we have
improved our mortgage service so customers receive quicker mortgage
offers. Our video conference service Principality Connected has
also been rolled out in the past year and as a result we have seen
a significant rise in the number of mortgage applications in
branch.
"Once our technology is firmly in place we will be able to offer
everyone a service that suits their lifestyles, complementing the
personal face-to-face branch service we offer Members, by giving
them a choice of how they want to access their accounts, by phone,
online or via mobile devices. Our commitment to the High Street
remains strong and we have seen footfall and demand rise in some
areas, as other financial institutions have withdrawn their
presence. This goes against the trend we are seeing across the rest
of the UK and while our Members continue to use, value and
recommend our branches, it will form the bedrock of our service
offering."
Supporting communities
Principality colleagues have yet again put in considerable
effort with their community work, raising more than GBP220,000 in
the past year for our three chosen charity partners, (Llamau,
School of Hard Knocks and Cancer Research Wales), with a total of
GBP504,000 raised, which includes match-funding by the Society,
split evenly between each charity across the three-year
relationship. The Society will raise cash for its new charity
partners, Alzheimer's Society Cymru and Teenage Cancer Trust Cymru,
for the next three years.
More than 5,000 children and young people benefitted from
Principality's Business in the Community (BITC) Business Class
Partnership, and its participation in Talk Money Week, run by the
Money Advice Service. Principality also invested GBP76,000 in 89
community projects across Wales.
Steve said: "Supporting our local communities and helping them
prosper is what we do as a mutual building society. I am very proud
of the efforts our colleagues have made to improve the lives of
others. We have some very exciting plans this year to help educate
our young people and give them the financial knowledge to prepare
them for adult life. Our work in this important area has been
recognised with an award by BITC for education. We have ambitious
plans to roll out a financial education qualification across Wales.
This is currently being piloted with seven schools and 1,400 pupils
in Carmarthenshire and will make a real difference to young
people's lives."
Outlook
Looking ahead to 2019, Steve added: "There will continue to be
significant political and economic uncertainty and we expect price
competition in the mortgage market to remain fierce and for our
margins to be squeezed further. Our profitability will continue to
be robust but will be progressively lower in the next few years as
we reshape and invest in our business for the long-term. We will
continue our single minded focus on transforming our core mortgage
and savings business. Our Society has resilience through its strong
capital and liquidity base to deal with any headwinds that might
emerge and ensure we protect our Members' interests. Our
performance in recent years in terms of growth and profitability
have built a solid foundation to allow us to invest for the future.
We will seek to grow our business in a safe and sustainable way for
our Members and to make sure we are in a strong position for future
generations."
S
Notes to Editors
Key Performance Highlights
-- Underlying pre-tax profit, which reflects the true trading
performance of the business - GBP43.8m (2017 - GBP53.4m)
-- Statutory profit before tax - GBP40.7m (2017 - GBP57.6m)
-- Total assets rose to GBP9.7bn (2017 - GBP9.3bn)
-- Savings balances grew strongly and now stand at - GBP7.0bn
(up from GBP6.5bn at 31 December 2017)
-- Helped more than 6,400 first time buyers get on to the property ladder
-- Net interest margin - 1.26% (2017 - 1.44%)
-- Net retail mortgage lending - GBP718.7m (2017 - GBP917.2m)
-- Strong capital ratios with a Common Equity Tier 1 ratio of 27.06% (2017: 26.14%)
-- Customer service has once again delivered and our net
promoter score stood at 78.6% (2017 - 74.8%)
-- Colleagues have raised, with match-funding by Principality, GBP504k for charity since 2016
-- 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 over GBP9 billion.
-- www.principality.co.uk
[1] Source: CACI's CSDB, weighted UK average interest rates for
fixed and variable rate Stock, Jan-October 2018 (latest data
available).
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END
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