Principality reports strong performance driven by increased mortgage lending
The Principality Building Society has reported a growth in profits and mortgage lending.
Pre-tax profits for 2013 were up £3m to £28.7m, a rise of nearly 12% compared to last year.
The profits rise was driven by an overall mortgage lending increase of 10.7%. Gross mortgage lending is now at an all-time high of £1.1bn.
The Principality is the largest building society in Wales and the sixth largest in the UK.
Principality group chief executive Graeme Yorston, said: “We have remained true to our core principles of helping people to buy homes and I am pleased that we have done this whilst also providing a secure and rewarding home for our members’ savings.
“As a mutual society, our main aim is not to maximise profits, but to achieve the right balance between savers, borrowers and profit.
“Profits have increased in line with our growth and this together with our strong balance sheet, underpinned by appropriate provisions, high quality assets and diversified funding ensures that we provide the essential level of capital to provide safety for our savers in the long term.
“Ongoing market conditions have had a significant impact on the demand for savers’ funds and, as a direct result of this, interest rates have reduced significantly across the market.
“Aware of this, we took a conscious decision to protect our savers in this market. We chose to more than treble the intake to our Member Loyalty Bond and to support our high street members by ensuring we consistently paid above the average market savings rate.
“We continue to remain reliant on retail savings, with 94.2% of our lending funded in this way.
“Our commitment to our members has positioned us as one of the top three most recommended banks and building societies for savings, testament to the dedication and commitment of our staff.”
First-time buyer lending increased at the Principality, with the society helping more than 1,800 first-time buyers across the UK onto the property ladder while also growing its Welsh first-time buyer market share to a record high of 12%.
Commenting on the society’s mortgage growth Mr Yorston added: “There is growing evidence that market stimulants have been successful in aiding economic recovery.
“While borrowers are experiencing greatly improved affordability, we recognised early that access to mortgage funding was still difficult for some.
“The launch of our 95% mortgage in early 2013 has specifically helped over 600 first-time buyers and home movers to tackle the deposit barrier.
“More recently, we have worked closely with Welsh Government towards the successful launch of ‘Help to Buy – Wales’, making mortgages available to home buyers who are purchasing a newbuild property and meet the Help
to Buy – Wales scheme criteria.
“Nevertheless, the result of a volatile housing market over the past few years has been a structural shift in the number of people aspiring to own their own home.
“The rental market now has a much stronger role to play in the provision of housing.
Recognising this we have supported the buy-to-let mortgage market, helping to ensure that landlords can continue to meet the demand of this growingmarket.
“Certainly, the various government support schemes and initiatives
have stimulated increasing positive housing market headlines.
The question of whether this is a sustainable recovery however remains.”
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