Iain Mansfield, chief executive of Principality Building Society, has outlined plans to double its commercial lending to more than £2bn to support much-needed new housing development. He also stated that despite advances in its digital offering, he cannot foresee a time when the mutual does not have a high street branch presence.
Branch network commitment
Cardiff-born Mr Mansfield, who took up his role last November, said the mutual's three-year naming rights extension with the WRU for the Principality Stadium will further deepen brand recognition. He described Principality as a “Welsh heritage business” but with plans to grow its savings customers and commercial lending clients across the UK.
Principality has assets of £14.1bn and employs 1,100 people. On his role, Mr Mansfield, who is also chairman of CBI Wales, said: “It’s about providing the services that a modern mutual should to as many people as we possibly can. The amount of people saving in the UK is relatively low and the number of people with just £100 of savings is a frightening statistic.”
Wholesale funding and covered bonds
While more than 90% of its lending comes from savings deposits, it does rely on wholesale money markets. Last year it finalised its first covered bond, with an inaugural £500m issuance at the start of this year on a five-year floating rate secured against residential mortgages. Principality now sees covered bonds as central to its wholesale funding plans and expects to be in the market annually under a more than £4bn programme.
Mr Mansfield said: “Our model is acquiring savings through our branch network and evolving and improving our digital franchise. We want to ensure that we have got flexibility in our wholesale markets with our securitisation programme and a covered bond programme which commenced at the beginning of this year.”
Digital shift and branch presence
The mutual holds saving deposits with a value of around £11bn. Mr Mansfield said: “The vast majority of that links to a branch. Last year we opened 175,000 new accounts and two-thirds of that was through a digital route.” Principality has 54 branches and a presence at 16 agencies across Wales and the English borders.
Mr Mansfield said: “I think it is highly unlikely that we would be a digital-only business as we have a community and heritage in Wales. There is a broader piece here as well around alignment with what we are trying to do.”
Commercial lending growth
Mr Mansfield is upbeat on the prospects for the mutual’s commercial lending, which is mainly centred around supporting housing development. He explained: “On commercial lending, we have a lent book of £900m and commitments of £1.1bn. We would like to double the size of the business to £2bn-plus.”
He noted that around a third of the book is lent to housing associations, aligning with the mutual's strategy. Principality provides finance to around 20 of the 30 housing associations in Wales and a handful in England.
Stadium deal and brand awareness
In 2015, Principality entered into a 10-year naming rights deal with the WRU, renamed the Millennium Stadium the Principality Stadium. The deal was extended by a year due to the pandemic, to 2030. Mr Mansfield said: “Our brand awareness has increased, with awareness in Wales, prompted and unprompted, continuing to be positive on the back of the stadium.”
On current trading he said: “From February to half year it was very challenging to price because of what has gone on in the Middle East. Irrespective of that, we are not far off the plan that we expected.”
