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Principality performs well as it supports customers during pandemic

Thomas Sinclair

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Principality has posted good annual results for 2020, as it focused all its efforts on supporting members, customers and colleagues during a challenging year.

The building society granted more than 15,000 homeowners a mortgage payment deferral, helping them to cope with the financial uncertainty created by the COVID-19 pandemic and supported communities by keeping its branches open throughout the lockdown periods.

Wales’ largest building society saw its assets grow to more than £11bn for the first time in its history, as it saw retail mortgage lending increase by £182m this year (2019: £499m), taking total retail lending over £8bn for the first time, despite the UK housing market coming to a standstill for the best part of four months in the first half of the year.

Last year the business signposted an expected reduction in profits in 2020 due to continued investment in technology to transform its core mortgage and savings operations. In addition, it also increased provision levels by £9.1m (2019: release of £4.1m) to cover potential future losses arising from the economic downturn caused by the pandemic. Whilst no significant credit losses have been incurred to date, Principality recognises that some customers may experience financial difficulties over the next few years, and its conservative approach takes into account economic forecasts of factors including unemployment levels and property prices.

Principality has strong capital reserves but this prudent approach has had a significant impact on results for 2020, resulting in an underlying profit before tax of £24.1m (2019: £39.8m) and statutory profit before tax of £19.9m (2019: £39.6m).

For the third year running Principality has won the What Mortgage award for Best Building Society Customer Service. This is reflected in the Society’s Net Promoter Score which is well above the sector average at 79.8%, meaning almost eight out of 10 of members say they would recommend Principality to family or friends based on their level of satisfaction.

CEO Julie-Ann Haines said: “Despite facing significant disruption and uncertainty this year, we maintained our award-winning customer service and delivered essential service for our members when they needed us most.

“During the first half of the year we had to deal with a number of operational challenges, not least enabling around 800 colleagues from our head office to work effectively from home. The strength and resilience of our business has allowed us to keep everyone in employment and not to furlough anyone. We strive to create a friendly, open and inclusive culture, and our colleagues continue to make us stand out in the sector with their warmth, personal approach and empathy.

“As promised last year, we continued to invest previous profits back into the business to boost our technology so we could offer our members improvements to their customer service. Our enhanced online security has made members’ accounts more secure, and a new web chat function has been added to improve the customer experience. In response to customer feedback, we have also increased the range of products available to customers online.  Our ambition is to move at pace in the next few years and we will continue to invest in the Society to improve our proposition and offer greater flexibility to our members. This will be complemented by fantastic service through our branches in Wales and along the borders with England.”

Principality’s Commercial team once again contributed in helping communities, with work completed on the second phase of affordable homes at The Mill development in Cardiff. The team have now completed £55m of the £75m affordable housing fund established in 2018 and this has seen take-up from housing associations across all corners of Wales. It will continue to focus its efforts to make housing more environmentally sustainable and support house-builders through funding of solar powered and zero carbon homes.

Now more than ever, Principality has continued to invest in financial education by partnering with Young Money for their Fiver Challenge which encourages the development of entrepreneurial and financial education skills for children, while raising money for local causes. More than 8,000 children signed up for this digital challenge through their schools.

On the outlook for 2021 Julie-Ann added: “We expect the economic environment to remain challenging in 2021 and beyond as the impact of the pandemic continues to be felt. In these difficult circumstances, I want to assure members that Principality remains a safe home for their savings, and has the strength to resist the turbulence we are all facing. Our strategy and long term priorities remain unchanged and, while our immediate focus remains on helping members, colleagues and communities through these uncertain times, we are committed to developing and growing our business in a safe and sustainable way.”

KEY PERFORMANCE INDICATORS

  • Total assets – £11.1bn (2019: £10.7bn)
  • Underlying profit before tax – £24.1m (2019: £39.8m)
  • Statutory profit before tax – £19.9m (2019: £39.6m)
  • Net residential mortgage growth – £182.2m (2019: £499.3m)
  • Residential mortgage balances – £8,175.7m (2019: £7,993.5m)
  • Savings balances – £8.2bn (2019: £7.6bn) 
  • Saving balance – increase is £596.1m (2019: £598.7m)
  • NPS – 79.8 (2019: 81.5)
  • Capital (CET1 ratio) – 27.10% (2019: 26.20%)
  • % of mortgages funded by savers – 88.9% (2019: 84.0%)
  • Charity fundraising total – just over £152,000
  • Employee engagement score – 86% (2019: 77%)
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Business

University to host industry summit online

Thomas Sinclair

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SUPPORTING industry’s recovery from the impact of the pandemic is a key priority for the University of Wales Trinity Saint David (UWTSD).

The University has a track record for working with industry through knowledge transfer, research innovation, workforce development and by providing a ready pipeline of skilled students and graduates, in partnership with employers.

In addition, UWTSD’s MADE Cymru initiative was established to support manufacturing industries in Wales to adapt to the challenges of Industry 4.0.

The initiative, funded by the EU via the Welsh Government, aims to support the economic recovery of manufacturers in Wales by offering part and fully funded training to businesses to upskill staff, as well as research and development that improves processes and products to reduce waste and costs.

In addition, UWTSD and MADE Cymru have organised an Industry Summit to be held online between June 8-10 to inform, engage and inspire businesses during this critical period of post-Covid recovery.

Expert speakers will be sharing their insights including James Davies from Industry Wales, Carol Hall, Regional Investment Manager, Development Bank of Wales, Chris Probert, Innovation Specialist, Welsh Government and Geraint Jones, Knowledge Transfer Adviser at KTN.

The line-up also includes Welsh manufacturers who will be sharing their own experiences, including Tim Hawkins, Managing Director, Markes International, Julia Chesney-Roberts, Commercial Manager, Riversimple, Angus Grahame, Founder of Splosh and Jacques Bonfrer, Co-Founder and Team Lead, Bot-Hive.

There will be guest talks from circular economy expert Eoin Bailey and lean author Daryl Powell and an opportunity to find out about the range of services offered by the University.

Graham Howe, Executive Head of the MADE Cymru project at UWTSD says: “This Industry Summit aims to explore issues and challenges facing manufacturing in Wales so that we can work together with employers to find solutions. 

“We always start with asking a manufacturer what their biggest problem is today and look at how we can help them with it.

“We aim to unravel potentially confusing challenges like these. Our approach begins by looking at what companies need to increase their productivity and competitiveness.

“We aim to lead the businesses we work with through a journey of continuous improvement – a journey that makes the most of Industry 4.0 technologies and their ever-growing digital capabilities to help solve the specific problems faced by each company.

“All of the feedback we receive from businesses shapes our curriculum – we want to produce employable, digitally literate graduates who can contribute to their workplace from day one”.

Alison Orrells is CEO and Managing Director of Safety Letterbox and has been one of the organisations participating in the MADE Cymru initiative.

She said: “It was important to keep innovating and investing to set us apart and come out stronger. It’s been intense but we had a game plan – now it is all about business future-proofing, being agile, collaborations and being adaptable.”

Covid-19 has affected every part of a business and shifted the focus from production to survival.

UWTSD recently led a round table discussion with Welsh manufacturers about the future of manufacturing in Wales.

That discussion found that their outlook is positive about the future.

Manufacturers accelerated their adoption of new technologies to enhance and optimise production.

With many employees on furlough, managers took the opportunity to rethink and invest in better IT, particularly communications, training and diversified into new product areas. They looked to local colleges and universities to help shift perceptions of jobs in manufacturing and demonstrated the career opportunities and pathways available.

They also loosened their reliance on overseas imports and looked for suppliers in the UK to minimise future risk of disruption.

All sessions of the Industry Summit are free to attend and places can be booked on the UWTSD website: https://uwtsd.ac.uk/made/made-cymru-industry-summit/

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Business

Casual and part-time workers: Most vulnerable to job loss

Thomas Sinclair

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A NEW series of reports that focus on the effects of Coronavirus on employment in Wales was published on Thursday, May 27, by Public Health Wales.

Young people, and those in precarious work have been identified as being especially vulnerable to employment changes caused by the pandemic, with mental wellbeing and struggles to find or keep work cited as major concerns.

Many young people are unaware of the support that is already available and how to access it, suggesting a greater need for organisations to engage with young people on a deeper level, to find solutions to the barriers they face for gaining good, fair employment –critical for people’s good health and wellbeing.

FURLOUGH HAD UNEQUAL IMPACT

Dr Benjamin Gray, Public Health Researcher at Public Health Wales, said: “18-29-year-olds are the age group with the highest proportion placed on furlough (41%) and 2.5 times more likely to have been placed on furlough than the 40-49 years age group and as such risk an uncertain future. Furlough could potentially mask a longer-term impact of Covid-19 on unemployment, and this is a concern, especially amongst this age group.”

Dr Ciarán Humphreys, Consultant in Public Health with the Wider Determinants of Health Unit at Public Health Wales, said: “Young people have told us they have been hit by a multitude of factors that will potentially have long-lasting effects on their employment prospects.

“It’s not just about being in work, though. It is the nature, quality, and long-term prospects of that work – good, fair work, that’s so important for people’s health. We saw this impact play out in the study.

“Some working young people we heard from struggled with the impacts of work changes outside their control on their mental wellbeing, whereas most of those in stable employment generally felt well, supported by their employer, and confident about the future.

“We know that at UK, Wales and local levels there have been important actions taken to mitigate the impact of these employment changes. However, some of these are expected to come to an end.

“A clear message from our work is that it will take a range of approaches to support young people responding to the employment challenges of the pandemic, to improve health.

“Action can be taken at national, regional and local level. Employers, too, have an important role in helping young people into good quality work, and that includes public sector organisations.

“If we are to safeguard future health we will need to work collaboratively and effectively, involving young people.”

The reports are the first in a series of planned employment analysis by the Public Health Wales Population Health programme exploring the impact of Coronavirus on the Welsh labour market and will help inform policy and decision-makers.

Further phases of the research will look at how challenges could be addressed as the economy reopens and recovers, so that those most at risk of longer-term harm from the crisis can secure decent quality future employment, training, and education.

Key findings across the reports were:

•             Around a quarter of a million workers were employed in shutdown sectors in Wales (18 per cent of all workers) at the outset of the pandemic with young workers (aged 16-24) much more likely to be employed in shutdown sectors (36 per cent compared to 11 per cent of those aged 35-64).

•             Young people faced varied and complex challenges due to the pandemic. In addition to the challenge in gaining, retaining, and partaking in good, fair work, issues raised included the effects of the temporary lockdown, such as disruption of vocational learning and home-schooling, or exacerbation of pre-existing issues such as the nature of employment for young people, Brexit and reported lower uptake of universal credit.

•             Those who work in low-paid, insecure work have less protection and rights due to the ‘flexible’ nature of their jobs. Young people are chief among these due to the specific sectoral trends in employment contract types. These employment changes have also translated into significantly different impacts for distinct groups, with those living in deprived areas of Wales appearing to have fared worst.

•             There is substantial uncertainty about the future, especially when government schemes such as furlough come to an end as these cushioned the economic pain caused by the pandemic.

•             Young people have been disproportionately affected by the pandemic and are likely to feel the effects for some time with concerns over scarring effects on job prospects and the potential for higher tax in the future to pay for the financial support schemes introduced by the Government during the pandemic.

•             While interventions are perceived by decision-makers and influencers to be available, apart from the furlough scheme, young people in this study did not, on the whole, appear familiar with them or accessing the support.

•             It will be critical to ensure young people are involved in the development of future support.

•             Evidence suggests that labour market policies can substantially impact the health of both the employed and unemployed populations in a positive way.

•             A range of policies are linked with improved mental and physical health outcomes, as well as reduced health inequalities; however, some, such as benefit sanctions, have been linked to either no health benefit or even harm.

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Business

Welsh business confidence highest since 2014

Thomas Sinclair

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BUSINESS confidence in Wales has grown to its highest level since 2014, a new report from chartered accountancy body ICAEW has found.

The Business Confidence Monitor(BCM) report for Wales found that confidence had climbed to its highest level since the third quarter of 2014.

This was likely due to the successful rollout of coronavirus vaccines, which led Welsh businesses to expect a strong economic recovery with hopes of large increases in domestic sales following falls over the past year.

Businesses reported that domestic sales had fallen slightly, while exports suffered the biggest fall seen since the BCM began in 2004, as global demand fell sharply during the coronavirus crisis and lockdowns reduced companies’ ability to transport their goods abroad. The contractions in sales also led to profit levels falling for many businesses.

A third of Welsh businesses said customer demand was a growing problem, but regulatory requirements were the most widespread concern, cited by over a third of companies. This was likely because of post-Brexit customs controls which affected Welsh exporters who are more reliant on the EU market than in other parts of the UK.

Some 30% of businesses cited transport problems as a growing source of difficulty, compared to 16% the year before.

Employment levels stayed largely the same over the past year. This was helped by the extension of furlough scheme, which should continue to limit job losses, at least temporarily.[5]

Beverley Waters, ICAEW Regional Director for Wales, said:“It’s positive news for the Welsh economy that businesses are feeling more confident for the future, doubtless a reflection of the vaccine rollout and prospects of a strong recovery.

“While challenges remain, Welsh businesses expect domestic sales and exports to increase once again. This is a positive outlook for our economy, which is needed after a difficult year.

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