Principality eyes bigger slice of mortgage market

Principality Building Society saw a £357m net increase in mortgage lending for the first six months of the year, and it has said it intends to see mo

Principality Building Society saw a £357m net increase in mortgage lending for the first six months of the year, and it has said it intends to see more growth.  

The building society reported that 88.9 per cent of mortgage lending was funded by deposits during the period covered by these results.

Steve Hughes, who became chief executive of the Principality Building Society in March, said:  “Our strategy is ambitious with a clear focus on transforming our core mortgage and savings business.

“Growing the residential mortgage business is important and benefits our members through building a sustainable business and providing the scale to allow us to invest for the future.”

Total savings balances held by the building society increased by £366m, compared with an increase of £298m for the same period in 2016.

Mortgage arrears were 0.59 per cent of the total loan book. This was a marginal improvement on the 0.63 per cent rate of arrears in the final six months of 2016.

Profit for the six months to June 30 was £31.8m, compared with £23.9m for the same period in 2016.

A sign of the competitive nature of the mortgage market is that the net interest margin, the gap between what it pays savers and the cash it earns in interest from borrowers, fell to 1.45 per cent in the first six months of the year from 1.62 per cent in the same period in 2016.

Mr Hughes added: “Our outlook for the second half of the year looks robust. However, headline profitability will fall in the coming years as we consciously invest in the business to improve further the propositions and service we provide for members and customers.

“This will involve significant investment in technology, processes, and our colleagues and in developing our branch network to meet the changing demands of our members.”

david.thorpe@ft.com

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