TIDM10AI
RNS Number : 0849C
Principality Building Society
06 February 2020
Principality Building Society Annual Results Announcement for
the year ended 31 December 2019
Principality posts strong annual performance
Principality has posted strong annual results, with new net
retail mortgage lending of GBP499m helping to take total assets to
over GBP10bn for the first time in the Society's history
(GBP10.7bn). To support the growth in lending the Society attracted
an additional GBP596m of new savings. Underlying profits for the
year were GBP39.8m and in line with expectations.
Principality once again provided award-winning customer service,
with consumer champion Which? naming Principality the top scoring
lender for customer satisfaction for the second year running. GFK
Global named Principality the most recommended savings provider in
Wales in each of the past two years. In 2019 the Society's Net
Promoter Score, which measures the satisfaction of customers and
brokers who recommend Principality to other people, improved to
81.5 per cent compared with 78.6 per cent in 2018.
The Society's savings products have maintained their position as
one of the best on the High Street. In 2019 Principality delivered
an average rate to savers of 1.18%, compared with a market average
over the same period of 0.74% [1].
Mike Jones, Interim CEO at Principality Building Society,
said:
"I am very proud of our performance and the excellent service we
continue to deliver to our Members. Our aims are very much focused
on securing the long term future of the Society and our underlying
reported profits reflect the cost of the significant investment we
are making in modernising the technology which supports our
mortgage and savings businesses. This will make our mortgage
application process simpler and more efficient for our customers
and mortgage brokers to use. Our colleagues will also deliver a new
savings platform which will improve our on-line service for
Members.
"Our strong capital base, supported by our low risk business
model, allows us to take a long term view when investing in the
business. Being a safe and secure home for our Members' savings is
crucial to the ongoing success of our business.
"This is an exciting period in Principality's history. Our goal
is to secure the future of the business for our next generation of
Members. While we are investing in technology, our commitment to
the high street is undiminished. As bank branches on the high
street in Wales continue to close, our presence is strong with 70
branches and agencies across Wales and the Borders. Our business
continues to invest in branches while others are shutting theirs.
As a major business in Wales, we want our towns to be thriving and
financial service organisations have a role to play in ensuring
towns and communities prosper."
Principality Commercial team has once again made an outstanding
contribution in helping to build and invest in Welsh communities.
This has included making GBP50m available in competitively priced
loans to help smaller housing developers build homes across Wales,
together with GBP75m of funding for housing associations to support
the creation of affordable homes. Their efforts represent a
significant contribution towards addressing the Welsh Housing
Agenda.
Last year, Principality has provided financial education to more
than 11,000 children. It invested GBP110,000 and helped thousands
of school children to earn the equivalent of a GCSE. Colleagues
also raised GBP156,000 to be shared equally between our charity
partners Teenage Cancer Trust Cymru and Alzheimer's Society
Cymru.
Mike added: "I expect the economic environment in 2020 to remain
challenging and competitive. Nevertheless, our strong capital base
means the business is able provide a safe and secure home for our
Members' savings irrespective of the prevailing economic
climate.
"The Society is built on strong foundations and we have
consistently demonstrated our ability to thrive in challenging
market conditions. Continuing to grow and invest in our business
and in our colleagues, will ensure that we provide the outstanding
service our existing Members have come to expect."
Notes to Editors
Key Performance Highlights
-- Underlying pre-tax profit, which reflects the true trading
performance of the business - GBP39.8m (2018 - GBP43.8m)
-- Statutory profit before tax - GBP39.6m (2018 - GBP40.7m)
-- Total assets rose to GBP10.7bn (2018 - GBP9.7bn)
-- Savings balances grew strongly and now stand at - GBP7.6bn
(up from GBP7.0bn at 31 December 2018)
-- Helped more than 4,900 first time buyers get on to the property ladder
-- Net interest margin - 1.09% (2018 - 1.26%)
-- Net retail mortgage lending - GBP499.3m (2018 - GBP718.7m)
-- Strong capital ratios with a Common Equity Tier 1 ratio of 26.20% (2018: 27.06%)
-- Customer service has once again delivered and our net
promoter score stood at 81.5% (2018 - 78.6%)
-- Colleagues have raised, with match-funding by Principality, GBP156k for charity
Consolidated income statement for the year ended 31 December
2019
2019 2018
GBPm GBPm
Continuing operations
Interest receivable and similar income 233.9 226.0
Interest payable and similar charges (122.5) (106.4)
-------- -----------
Net interest income 111.4 119.6
-------- -----------
Fees and commission receivable 4.9 5.7
Fees and commission payable (1.5) (1.6)
-------- -----------
Net fee and commission income 3.4 4.1
Other operating income 1.0 1.5
Other fair value losses (0.2) (2.4)
-------- -----------
Net operating income 115.6 122.8
Administrative expenses (72.8) (75.7)
Depreciation and amortisation (7.3) (5.8)
-------- -----------
Operating expenses (80.1) (81.5)
Impairment provision release/(charge) 4.1 (0.6)
Operating profit and profit before taxation 39.6 40.7
Taxation expense (7.6) (7.8)
Profit for the year 32.0 32.9
-------- -----------
Consolidated statement of financial position as at 31 December
2019
2019 2018
GBPm GBPm
Assets
Liquid assets 1,569.6 1,112.5
Derivative financial instruments 21.3 24.8
Loans and advances to customers 9,033.1 8,498.7
Fixed and other assets 71.8 51.4
Total assets 10,695.8 9,687.4
--------- --------
Liabilities
Shares 7,588.5 6,989.8
Borrowings 2,378.1 2,019.4
Derivative financial instruments 50.4 31.6
Other liabilities 34.2 32.3
Subscribed capital 61.2 63.6
--------- --------
Total liabilities 10,112.4 9,136.7
General reserve 582.1 550.1
Other reserves 1.3 0.6
--------- --------
Total equity and liabilities 10,695.8 9,687.4
--------- --------
Key results and ratios 2019 2018
% %
Net interest margin 1.09% 1.26%
Cost income ratio 69.4% 66.4%
Management expense ratio 0.79% 0.86%
Common equity tier 1 capital ratio 26.20% 27.06%
Leverage ratio 5.21% 5.60%
Liquid assets as a percentage of shares and
borrowings 15.8% 12.4%
-- 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 GBP10.7 billion.
-- www.principality.co.uk
[1] Source: CACI's CSDB, weighted UK average interest rates for
fixed and variable rate stock, January - October 2019 (latest data
available).
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END
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