Principality Building Society has reported an underlying profit before tax of £22.2 million for the first half of 2026 as it continues to grow its mortgage lending and invest in its long-term transformation.
The UK’s sixth largest building society and Wales’ leading customer-owned business has published its half-year results against what it describes as a challenging economic backdrop.
Principality’s net operating income increased by £4.7 million to £86.2 million, compared with £81.5 million in June 2025.
Underlying profit before tax remained resilient at £22.2 million, compared with £22.5 million in June 2025. This included a £5.6 million impairment provisioning charge in response to the weakening economic outlook.
Total assets increased from £13.9 billion in December 2025 to £14.1 billion.
Iain Mansfield, Chief Executive Officer of Principality Building Society said: “The first half of the year has been dominated by continued geopolitical uncertainty, with conflict in the Middle East creating volatility across financial markets and influencing expectations for future Bank of England base rate changes. These external forces have contributed to a challenging operating environment for households and businesses across the globe.
“Despite this backdrop, the Society delivered solid financial performance, while maintaining a strong capital and liquidity position, all while managing our costs and taking deliberate decisions that strengthen the Society for the long term.
“Strong and sustainable income is what allows us to continue investing in the future of the Society, while delivering value for Members today.”
The Society’s net interest margin increased to 1.27%, up from 1.17% in June 2025.
Operating expenses remained broadly stable at £60.2 million, compared with £59 million in June 2025, while its management expense ratio moved from 0.84% in December 2025 to 0.86%.
Principality reported a capital ratio of 19.2%, compared with 18.7% in December, while its liquidity ratio remained at 13.6%.
Mortgage lending grows to £11.3bn
Mortgage balances increased by £0.2 billion during the first six months of the year, rising from £11.1 billion to £11.3 billion.
The Society now supports 89,867 homeowners, compared with 88,941 at the end of 2025.
It also helped 3,195 people take their first step onto the property ladder during the period, compared with 4,033 in June 2025.
Iain continues: “In the face of a challenging market, we continue to listen to and respond to our brokers and customers’ feedback, which has meant that we have been able to take a more focused and distinctive approach to our lending, helping more people access finance for their homes, responsibly.”
Principality supports 18 of 31 housing associations across Wales, while its commercial lending book currently stands at £864 million alongside further commitments of nearly £300 million.
The Society committed £73 million of new housing association lending, compared with £15 million in June 2025.
It also agreed funding with property developers that will support the development of 352 new homes, compared with 55 in the same period last year.
Principality has also expanded its presence in the English housing association market through a £30 million lending agreement with Plus Dane Housing.
Savers receive £33m in additional interest
Savings balances remained at £11.5 billion, compared with £11.6 billion in December 2025.
Between January and May, Principality paid savers an average of 3.52%, compared with a market average of 2.82%.
The Society said this resulted in £33 million of additional interest being paid to its saving Members during the five-month period, compared with £37 million between January and May 2025.
Iain continues: “Our Members entrust us with their savings in a highly competitive market. We have remained focused on attracting and retaining funding that supports the long-term strength of the Society, rather than purely pursuing balance growth.”
Customer experience increased from 70.8 in December 2025 to 73.8.
Principality’s covered bond programme provided the business with £500 million of liquidity at the start of the year, while the Society also intends to launch a new Digital Savings App later this year.
£0.5m distributed to causes across Wales
Principality said its profits also enable it to invest in communities across Wales.
During the first half of 2026, £0.5 million was distributed to causes across Wales through its Future Generations Fund, while £127,000 was raised for Barnardo’s Cymru.
Iain continues: “The profit our business makes means we can make a meaningful and lasting impact in the communities we operate in. With the largest branch presence of any financial services provider in Wales, our presence matters.”
Looking ahead, the Society said the next 18 months would focus on its long-term transformation while navigating an increasingly difficult-to-predict economic environment.
Iain continues: “It’s a pivotal time for your Society. The first half of 2026 has been about putting the plans in place for the future while also strengthening our foundations to enable the transformation needed to ensure we remain relevant in a rapidly changing world.
“Looking ahead across the next 18 months, the macroeconomic environment is becoming more difficult to predict, though we’ll continue to ensure we remain steadfast on delivering our purpose, creating a society of savers where everyone has a place to call home.”
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