Nationwide Reports Dip in Half-Year Earnings
Nationwide Building Society has announced a significant drop in its half-year profits, primarily driven by a contraction in its mortgage lending activities and increased administrative costs. The mutual reported a pre-tax profit of £486 million for the six months leading up to the end of September, a noticeable decline from the £568 million recorded during the same period last year.
Key Financial Performance and Member Benefits
The society's total net mortgage lending fell to £4.7 billion for the half-year, down from £6.3 billion the previous year. Nationwide also disclosed that the average loan-to-value for new residential mortgages stood at 72%. Despite the profit dip, Chief Executive Dame Debbie Crosbie emphasised the society's strong market position, stating it was "number one for growth in mortgages and retail deposits."
She also highlighted that more people switched their current accounts to Nationwide than to any other brand. The financial benefit delivered to members decreased to £780 million, down from £950 million a year earlier. This reduction was largely attributed to a narrower mortgage customer rate differential compared to the wider market.
In a significant move for its members, the board distributed its third Fairer Share Payment of £409 million in June. This payment was made in addition to the member benefit and was given to eligible members who held a qualifying current account along with either qualifying savings or a mortgage.
Rising Costs and Economic Outlook
Underlying administrative expenses saw a substantial increase, rising by £826 million to £1.9 billion. Nationwide confirmed this surge was predominantly due to the costs associated with its acquisition of Virgin Money. Looking ahead, the lender stated it remains "vigilant" to ongoing economic uncertainty and is "continuously assessing" the potential impacts on borrowers.
The mutual expects borrowers to continue facing affordability pressures but forecasts that arrears rates will remain well below the industry average. It also affirmed that the credit quality of its lending portfolios and the adequacy of its capital resources remain strong, despite a softening labour market.
In a recent commitment to its physical presence, Nationwide pledged last week to keep all 696 of its Nationwide and Virgin Money branches open until at least 2030.
