The lender’s net mortgage lending fell by 33% from £605.3m to £405.7m year-on-year, while its net interest margin shrank from 1.21% to 1.17%.
Despite margin compression, net interest income increased by £3.1m as at 30 June, from £78.5m in H1 last year to £81.6m, largely due to the growth in the mortgage book.
Reporting its interim H1 financial results, the Welsh mutual said it had “achieved a strong and resilient performance in the first half of 2025”, despite a backdrop of challenging global and market conditions.
Gross mortgage lending is not disclosed in the society’s interim financial reporting. Principality Building Society ended the year on £2.4bn of gross lending in 2024, up from £2.2bn the year before.
Statutory profit before tax fell from £22.4m in H1 last year to £21.9m in H1 this year.
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Julie-Ann Haines, the firm’s chief executive, said: “The political and economic outlook for the second half of the year remains challenging, with inflation above target and rising National Insurance contributions for employers expected to put pressure on wage growth.
“Meanwhile, there is potential for more tax shocks for businesses on the horizon. As a result, the market will look to the forthcoming Bank of England base rate decisions to ease affordability pressures for people with mortgages and to drive investment and economic growth.”
