...Generally Low Risk: The ratings of Principality Building Society (Principality), Wales' biggest building society, reflect the generally low overall risk profile of the society's assets, which continue to encompass a modest appetite for loans backed by commercial real estate (CRE) and second-charge mortgages. Healthy First-Charge Book: Fitch Ratings considers lending to be of generally sound quality, underpinned by prime residential loans (end-1H14: 77% of gross loans), which have been performing well. Asset quality has been supported by an extended period of low interest rates and a gradual improvement in the operating environment, including falling unemployment and a housing market recovery. Exposure to Higher-Risk Segments: Some vulnerability remains in the CRE and second- charge books (1H14: 23% of gross loans), which historically accounted for the majority of the society's loan impairment charges (LICs) and which Fitch views to be of higher risk. The society has been focusing on de-risking...
