Principality reveals pre-tax profit of £14.5m

Principality, the parent of secured loan lender Nemo Personal Finance has reported pre-tax profits of £14.5m for 2008.

The figure, before a £5.2m levy to the Financial Services Compensation Scheme, is significantly down on its 2007 profit of just over £30m.

It says the economic downturn has resulted in increased provisions during 2008 particularly in the Nemo business, but the group continues to ensure these are maintained at a prudent level to accurately cover potential losses across the group.

The society says anticipating the economic slowdown it took early decisions to curtail lending growth, especially in its secured loans subsidiary business, Nemo Personal Finance.

Growth plans for traditional society mortgage lending were also trimmed back and commercial lending volumes reduced.

It says the slow down in the housing market posed significant challenges, particularly in secured loan subsidiary Nemo and Estate Agency Peter Alan.

But 95% of the society’s loans are now funded by retail society savings balances, ensuring high levels of liquidity for the business and enhanced returns for savers.

Peter Griffiths, group chief executive of Principality, says: “In a year of unprecedented financial market conditions, I am pleased to report a robust business performance as Principality Group continues to successfully navigate the financial storm.

“We continue to be profitable, our balance sheet is strong and recruitment of new members is at an all time high. We have continued to safely invest our reserves and the society has not been hit by direct losses from exposures to defaulting UK and overseas banks.

“Despite the pace, depth and ferocity of problems in the financial services sector, I believe the Principality brand and franchise has been strengthened during these testing times.’

Principality’s retail savings balances increased by £822.1m to £4,626.5m, with group assets increasing by £546.2m to £6,398.7m.