Principality ramps up commercial lending in steady first half to its financial year

Its commercial lending book currently stands at £864m alongside further commitments of nearly £300m.

Principality Building Society continued to ramp up commercial lending to support the building of new social homes in the first half of this year while bearing down on costs against the backdrop of inflationary pressures.

The Cardiff headquartered mutual, which is the sixth largest in the UK on total assets, has reported an underlying profit before tax of £22.2m (June 2025: £22.5m), reflecting a £5.6m impairment provisioning charge in response to the weakening economic outlook. Its net operating income increased to £86.2m, up £4.7m year on year, while net interest margin rose to 1.27%. In the first half total assets were up from £13.9bn in the second half of 2005 to £14.1bn.

The building society said it remains focused on cost management, in the face of inflationary challenges. As a result it said its operating expenses have remained broadly stable year-on- year at £60.2m (June 2026) compared to £59.0m (June 2025) while its management expense ratio has remained stable.

Its chief executive Iain Mansfield, 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.

“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.”

Its commercial lending book currently stands at £864m alongside further commitments of nearly £300m. It committed £73m of new housing association lending (June 2025: £15m) and agreed funding to property developers that will fund the development of 352 new homes (June 2025: 55) It also expanded its presence in the English housing association market, through a £30m lending agreement with Plus Dane Housing.

Mr Mansfield has said he would like to double the size of Principality’s commercial lending to £2bn-plus.

During the first half the mutual’s mortgage balances increased by £200m £11.3bn (December 2025: £11.1bn). It now support 89,867 homeowners (December 2025: 88,941).

At the end of June its savings balances were £11.5bn (December 2025: £11.6bn). Mr Mansfield said “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.”

On the outlook he added: “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.”