Principality Building Society continues record growth, delivering against strategy

Principality Building Society has announced a record-breaking performance for year ending December 31, 2024. Against a challenging economic backdrop, the Society has continued to support first time buyers grow its mortgage lending, and encourage regular saving habits among its Members while offering better than average savings rates, in line with an ambitious strategy. 

The Society’s success has been underpinned by a number of investments, including technology improvements, investment in customer experience, and continued commitment to the high street and the communities it serves. 

Julie-Ann Haines Chief Executive of Principality Building Society said: “At a time when economic uncertainty continues to challenge households across the country, we have remained steadfast in our purpose – to build a society of savers where everyone has a place to call home. 

We have seen record growth in both savings and mortgages this year, helping more Members to save and more customers to own their own home and are on track to meet our 2030 ambition statements we set out in 2022.”

Better Homes

Julie-Ann continued: “Access to affordable housing remains one of the most pressing challenges of our time. Against a difficult economic backdrop, we are delivering on our ambition for better homes.

This year, we’ve helped more than 8,120 first-time buyers take their first steps onto the property ladder, (8,130 in 2023). Overall, we now support 87,558 (80,883 in 2023) people to have their own home. 

Our Commercial division now supports the majority of housing associations in Wales, funding affordable housing across communities and developing meaningful partnerships. This year, we provided £25 million in long-term financing to Cardiff-based Hafod, enabling the construction of 300 affordable homes over the next five years. We also celebrated the completion of the final phase of the Mill in Cardiff, a decade long project, which delivered 800 homes —half of which offering discounted, intermediate, or social rent.

We’ve also continued to invest in our operations to make it easier for Members and brokers to do business with us, which is why we’ve been named Best Building Society for Customer Service 2024 by What Mortgage Awards for the seventh consecutive time.”

Secure Futures

Julie-Ann continued: “It has never been more important to save for life’s uncertainties and our role is to get more people saving more regularly and ensure everyone has the tools and support they need to develop positive saving habits - creating a society of resilient savers. 

I’m pleased to share that 2024 has been another record year for our savings performance. We have seen more accounts opened than ever before, with our savings balances increasing by £1.7 billion, from £9.1 billion to £10.8 billion. This significant growth in savings supports our mortgage ambition, which is funded by savers’ deposits*. 

As a mutual building society, we know that showing loyalty to our Members  is important.  We are consistent in providing higher saving rates to our Members (4.06% versus 3.33% on the high street), as well as launching new products, like our regular Christmas saver, to help people to save more regularly**.” 

 

^{* Percentage of mortgages funded by savers (2024: 95.7%, 2023: 89.8%)}

^{**On average, Principality has paid 4.06% for its savings rates compared to the market average of 3.33% between November 2023 and October 2024.
Source: CACI’s CSDB, Stock, Weighted Average Interest Rate for November 2023 – October 2024.} 

Fairer Society

Julie-Ann continued: “As a mutual, we aim to tackle big issues at the local level, in the communities we serve. Each year we contribute up to 3% of our profit before tax each year, to causes that benefit communities. As part of that commitment, I’m pleased to share that we’ve launched the 4th iteration of our Future Generations Fund, with new funding in excess of £0.5 million, taking the fund to £1.5m since it was founded in 2022 in partnership with Community Foundation Wales. 

We’ve also supported the financial education of 50,000 children and young people. We’ve donated £245,000 to our charity partners Tŷ Hafan and Hope House Tŷ Gobaith children’s hospices in 2024 through colleague and Member fundraising. This takes our total contribution across the 3 year partnership to £752,000.     

Our dedication to diversity and inclusion has been recognised too, with Principality winning the Financial Services Company of the Year Award from the National Centre for Diversity. This would not be possible without our excellent colleague networks, who play a crucial role in fostering an inclusive culture within the Society.

Events like the annual PRIDE Cymru march, where our colleagues celebrated with local businesses and community members, as the headline sponsor for the second year in a row, underscore this commitment.” 

Fit for the Future: Investing in Your Society

Julie-Ann continued: “Over the past year, we have taken significant and difficult steps to simplify our operating model, allowing us to better serve both our savings and mortgage customers, along with our commercial lending clients, while streamlining costs to create the capacity for purposeful growth. 

As a modern mutual, we are led by our Members, who have told us that they value both our strong presence on the high street and the convenience of enhanced digital services. That is why I am pleased to continue our commitment to a long-term presence on our high streets and communities that underpin Member experience. 

At the same time, we have launched our new website allowing us to continue to improve the experience across both digital and physical channels. We are creating a future where digital and personal service work together, ensuring that Members always have a choice in how they interact with us.

These strategic steps are integral to building a Society that is responsive to the changing needs of Members today and prepared for the future.”

Strong Financial Performance

Julie-Ann continued: “We have again delivered robust financial results, as we navigate a volatile external environment in the UK and across the globe. 

We have seen significant growth in retail lending of £1.2bn, increasing our total residential lending from £9.3bn to £10.5bn supported by our responsible lending practices and conservative risk management approach.   

Savings growth of £1.7bn has been equally significant, as we have sought to offer value to our Members through our branches, whilst delivering growth in our digital savings channels. 

Total assets are now over £14.1bn, (up by £1.6bn from £12.5bn in 2023), evidencing that our strategy of creating sustainable and purposeful growth is delivering.

Our underlying profit before tax was £40.3m (2023: £60.3m), with the fall in profits driven by an expected reduction in NIM (falling from 2023: 1.52% to 2024: 1.22%) and one-off costs associated with our operating model changes. Reported profit before tax was £49.2m (2023: £60.3m) recognising fair value gains in the year.

Meanwhile, we maintained a strong liquidity (2024 231%, 2023 203%) and capital position (CET1 of 19.8% in 2024. 21.8% in 2023) to support continued growth and investment in the Society for the benefits of Members whilst ensuring we have financial resilience.”

Outlook

Julie-Ann concluded: “As we look to 2025 and beyond, the Society continues to be equipped to navigate the challenging economic and political landscape that we operate in. 

A lower base rate horizon and lower inflation could suggest a more positive outlook for UK consumers and the economy, albeit there remains concern around the cost of living for the most vulnerable within our communities.

I am confident the Society will continue to adapt and invest for the long term, with our purpose remaining at the heart of everything we do. Whether it’s helping more people into homes or building financial resilience for life’s uncertainties, we remain committed to support our Members, colleagues and communities for another 165 years.” 

Key Performance Highlights

• Total assets: £14.1bn (December 2023: £12.5bn)
• Retail mortgage balances: £10.5bn (December 2023: £9.3bn)
• Savings balances: £10.8bn (December 2023 : £9.1bn)
• Statutory profit before tax: £49.2m (December 2023: £60.3m)
• Underlying profit before tax: £40.3m (December 2023: £60.3m)
• Common Equity Tier 1 ratio: 19.8% (December 2023 21.8%)
• Net interest margin: 1.22% (December 2023: 1.52%)
• Statutory Management Expense Ratio: 0.94% (Dec-23 0.99%)