Principality Building Society saw its pre-tax profits drop by almost £17m last year, with the lender expecting profitability to be "progressively lower" in coming years.
In its annual financial results published today (February 7) Principality reported a statutory profit before tax of £40.7m for 2018, down from £57.6m in 2017 but in line with the society’s expectations.
Steve Hughes, chief executive at Principality Building Society, said the society had pursued its business growth strategy despite increasing economic and political uncertainty and a competitive mortgage environment causing profits to shrink.
He said: "As a mutual, member-owned building society, our aim is not to maximise profit but to focus on the long-term future of the society by ensuring we invest in the business whilst offering competitive rates to our savers and borrowers.
"Our profitability remains solid and we will continue to ensure we add to capital to protect our members’ interests."
Principality’s net mortgage lending was £718m last year, compared with £917.2m in 2017, after the mutual attracted 6,400 first-time buyer customers.
Mr Hughes said: "We are reaping the benefits of our focused mortgage strategy which has built strong relationships with brokers across the UK and seen investment in our direct to consumer mortgage offering."
The society’s total assets rose to £9.7bn in 2018, up from £9.3bn the previous year, with the lender expecting to invest in technology and infrastructure this year to improve its digital service.
Mr Hughes said he expects the society’s profits to be "progressively lower" in the next few years as it invests in its business for the long term, but added profitability would remain "robust".
He said: "There will continue to be significant political and economic uncertainty and we expect price competition in the mortgage market to remain fierce and for our margins to be squeezed further.
"Our society has resilience through its strong capital and liquidity base to deal with any headwinds that might emerge and ensure we protect our members’ interests.
"Our performance in recent years in terms of growth and profitability have built a solid foundation to allow us to invest for the future.
"We will seek to grow our business in a safe and sustainable way for our members and to make sure we are in a strong position for future generations."
rachel.addison@ft.com
