Resilient Performance Against Challenging Market Conditions

Wales’ largest building society has reported encouraging progress in first half performance towards ambitions to create a society of savers where everyone has a place to call home. 

Julie-Ann Haines, Chief Executive of Principality Building Society said: “Despite a backdrop of challenging global and market conditions, we have achieved a strong and resilient performance in the first half of 2025. Amid pressures on households and businesses, Principality delivered against our ambitious strategy, invested in local communities while attracting savers and growing our mortgage book and commercial lending business. Thank you for continuing to put your trust in us, as our Members and customers. 

This would also not be possible without the hard work and dedication from Principality colleagues who live and breathe our values, working hard to make the hopes and aspirations of our Members possible and I’d like to thank them for their commitment.” 

Better Homes

Julie-Ann continued: “Creating a society where everyone has a place to call home remains central to our purpose. Affordability and housing supply continue to pose significant challenges for buyers, even after two Bank of England base rate cuts so far in 2025. 

In the first half of the year, I’m pleased to say we helped 4,033 first-time buyers (30 June 2024: 3,576) purchase the keys to their first home, bringing our total number of homeowners to 89,295 (30 June 2024: 84,611).
We want to ensure our products remain competitive, which is why we passed two thirds of rate reductions on to mortgage customers on variable loans.

I am proud that our commercial team continues to perform well against a backdrop of a challenging economic market, providing funding to the majority of housing associations in Wales, to create more affordable housing. I am also pleased to share we are expanding our offering in North Wales, with newly committed funding of £15m to North Wales Housing Association and approval for a new deal with Clwyd Alwyn Housing Association, which will see Principality provide funding of £35m. 

Together, these important deals form part of our overall £300m of funding which we have committed to housing associations in Wales. 

I am also delighted that the excellent customer service Principality colleagues have given to our Members led to us being voted Best Building Society for Customer Service by What Mortgage for the eighth consecutive year. At the same time, I’m pleased that we have met our Customer Satisfaction Score (CSAT) score, which was 70 % at the end of June.”

Secure Futures - creating a society of savers 

Julie-Ann continued: “It has never been more important to save for life’s uncertainties, so I’m pleased to share that as of the half year point, in total 454,534 savers are trusting Principality with their returns. We’ve also increased the number of people saving regularly by 23,403 to 95,922 (30 June 2024: 72,519). 
Many of our new customers have joined us through our regular saver products, with our six-month regular saver being our most popular product this year. We're pleased to see our products helping more Members save more regularly for their long and short-term goals. 

Our customer centric approach is providing real benefits for our savings business as two-thirds of our savings growth has been generated through the retail network this year - with savings balances, including interest paid, increasing by £0.5bn.

While others are withdrawing from face-to-face services, I am proud that Principality is continuing to provide the highest standard of services in communities across Wales and the borders, as we remain the largest financial services presence, committing to our branch presence until at least 2030. We are also investing in our network, which is why we recently relocated our Swansea branch to a more central location on the high street. 

This year’s ISA season also marked a surge of growth with balances growing by £302m, and branch ISA balances increasing by £183m, highlighting the real value people put into the product, aimed at growing their savings. The proposed changes to Cash ISA limits have been a big theme of Member feedback this year, so we have been working hard with the Building Society’s Association (BSA) and through proactive engagement with Treasury, to ensure Member voices are being heard.  

We're expecting at least one more base rate cut this year, which should be positive news for mortgage customers, even though it presents challenges for savers. While we aim to remain as competitive as possible, we must operate prudently within broader market conditions.

As a building society and a mutual, we’re owned by our Members, not shareholders, so I’m proud to say that on average, we’ve paid savers 3.98% versus the market average of 3.18%* for the first four months of 2025, resulting in the equivalent of an additional £29m (0.80%) in interest paid to our saving members.2”

Fairer Society 

Julie-Ann continued: “Because we’re Member-owned, we do things a little differently - we’re proud that we support our communities, rather than paying dividends to shareholders. This enables us to reinvest a percentage of our profits into tackling social challenges and supporting the development of a fairer, more inclusive society.   

In 2022, we strengthened this commitment by pledging to allocate up to 3% of our annual profit for social purpose-resulting in over £1.5 million invested to date in community grants and initiatives. The latest round of funding for our Future Generations Fund opens in September, which will see £500,000 available for third sector and community organisations across Wales to bid for, where there is considerable hardship within some of our communities. 

Building on this momentum, I was also very proud to announce our new charity partnership earlier this year with Barnardo’s Cymru. This colleague-led partnership encourages colleagues to give of their time and efforts to raise much needed funding.  The Society has already committed over £100,000 in donations to launch the partnership, providing vital support to improve the lives of children and young people across Wales. 

We continue to listen to our Members, and evolve our ways of boosting access to cash to communities that need it most. This year, we opened the doors to a new branch concept in Buckley library, partnering with OneBanx to install a terminal providing essential cash services for customers of 23 major banks.  Buckley has lacked the presence of any high street bank or building society for a number of years and we are delighted to find innovative ways for local business and customers to manage their money.

The Society’s pledge to diversity and inclusion continues this year and I’m delighted that we have been awarded Best for Supporting Different Pathways to Parenthood at the 2025 Best Practice Awards.”

Resilient Financial Performance 

Julie-Ann continued: “The credit quality of our existing book remains resilient despite challenging market conditions, as we stay true to our purpose of helping more people to buy their first home, increasing by £0.4bn and bringing our retail mortgage balances to £10.9bn (31 December 2024: £10.5bn). 

We have seen an expected reduction of Net Interest Margin to 1.17% (31 December 2024: 1.22%) reflecting market pressures and the falling rate environment. 

We have seen an increase in our underlying profit, for the first 6 months of the year at £22.5m (30 June 2024: £20.1m), whilst statutory profit before tax was £21.9m, broadly in line with last year’s performance (30 June 2024: £22.4m).   
Meanwhile, our retail savings have increased by £0.5bn, taking our current total retail savings balance to £11.3bn (£10.8bn Dec 2024), proving that we are making real progress in our ambitions to get more people saving, more regularly. 
As a business, we hold adequate liquidity and capital reserves to remain resilient and secure for the long term.”

Outlook

Julie-Ann continued: “The political and economic outlook for the second half of the year remains challenging, with inflation above target and rising national insurance contributions for employers expected to put pressure on wage growth. Meanwhile, there is potential for more tax shocks for   businesses on the horizon. As a result, the market will look to the forthcoming Bank of England base rate decisions to   ease affordability pressures for people with mortgages and to drive investment and economic growth.  
Against this backdrop, Principality remains resilient and steadfast to our purpose: to build a society of savers where everyone has a place to call home, just as we have for the past 165 years.  

I'm proud of the resilience we've shown in the first half of 2025, and confident we will continue to meet the needs of our customers, colleagues, and communities.  

Thank you for your continued support of your Society.”

Julie-Ann Haines
Chief Executive Officer 
1 August 2025