Gross Lending £549.5 million (2003 - £388.2 million).
Other Income increased to £8.2 million (2003 - £7.0 million).
Profit before tax £8.2 million (2003 - £9.9 million).
Total assets £3,836 million (2003 - £3,248 million).
Commenting on the results, Peter Griffiths, chief executive of Principality Building Society, said: "After the first half of 2004 we are on course to deliver our commitments to all our stakeholders. The Group interim results are strong - total assets have increased to £3,836 million and despite operating within a highly competitive market pre-tax profits are £8.2 million.
"The results show the impact of costs associated with the planned investment in improved infrastructure for the long term benefit of members. The slight decrease in profitability is in line with the anticipated trend in the three-year plan, which we are confidently expecting to complete at the end of 2005.
"The introduction of the Financial Services Authority’s mortgage regulation has been well documented and the costs associated with the implementation of compliant systems and procedures are reflected in the numbers above. However, we have been well prepared for these changes and we welcome the opportunities the new regulations bring to the Society and the benefits they will provide to our members.
"The Welsh housing market remains buoyant underpinning strong growth in gross lending which increased by 42% compared to the same period last year to £549 million and mortgage balances grew by 7.1% in the first half of the year hitting the £3billion mark. We will continue to develop and build on our mortgage product range for our members and will drive the mutual dividend hard.
"Our gross capital ratio at 7.4% has been enhanced by a very successful £60 million PIBS issue which was completed on 1 June. This capital injection will underpin current plans to grow the business as the Society continues to evaluate new opportunities for growth and diversification. We have already demonstrated our appetite to diversify with the success of our commercial lending team, the Principality valuation team and the estate agency subsidiary which have contributed to an increase of 17.1% in other income. This gives us a sound platform for future ventures.
"We saw a slight downturn in savings in the past six months but the net balance remains almost unchanged - a dip of £21.6 million on our total savings book of £2.9 billion. However, the competitive nature of the direct savings market has impacted on inflow and to combat this we are currently developing a direct capability with the objective of providing the Society’s customers with an even better service and greater choice in the way they conduct their business with us."
Griffiths closed with his outlook for the remainder of 2004. "For the final six months of the year we have planned for a major programme of investment in our branch network demonstrating our commitment to serving our members within their communities. Following the successful opening of our Wrexham branch, this programme includes the opening of a brand new branch in Llanelli the relocation of our Shrewsbury branch and the renovation of our Chester and Ebbw Vale branches.
"We move into the second half of the year confident of the continued success of the Society. Our focus will continue to be on maintaining our position as the leading Welsh provider of mortgages and savings, developing new products and services for our members and building new income streams to supplement margin returns."
