Principality has announced today (10 February) in its annual results that from 2016 it is to stop lending from its secured loans business Nemo Personal Finance, in order to support the building society’s aims for the future.
Graeme Yorston, group chief executive at Principality, said to ensure the group continues to deliver value for members, it regularly reviews its operating model and over the last 12 months it undertook a thorough strategic review of its secured loans subsidiary Nemo.
He said: “Nemo has had a very positive year with profits of £14m (2014: £13.9m) and a strong balance sheet reflected in reduced levels of impairment charges. Competition in the market has remained high.”
Mr Yorston added, however, that the secured loans market continues to develop and expand away from its traditional base.
As such, the group has carefully managed this business but, as a result of these developments, it does not want to increase the level of participation in this market.
He said: “The board has therefore taken the decision to cease new lending at Nemo and focus the group’s investment on the core building society and commercial businesses.”
Principality Building Society reported an underlying profit of £57.8m, compared with £51.9m.
The building society also announced record customer satisfaction scores of 86.9 per cent against 2014’s figure of 86.8 per cent.
Retail mortgage balances hit £5.2bn against 2014’s £4.8bn, and the building society supported 3,500 first-time buyers onto the housing ladder.
Mr Yorston said: “For the first time in our history our mortgage lending to homeowners has grown to over £5bn and we have increased our support to first-time buyers, helping 3,500 people get a foot onto the property ladder in 2015.
“Our strong profitability has further strengthened our capital position and our balance sheet remains in a strong position. This profit enables us to build a solid platform to increase investment in our people, processes and technology so that we can meet the demands of our members into the future and provide excellent service when and how they want it.”
Principality has three group businesses: Principality Building Society, Principality Commercial, its commercial lending arm, and Nemo Personal Finance, a secured loans provider.
ruth.gillbe@ft.com
