Nationwide sees profits fall after handing cash to members
The lender said it handed £344 million to its members last year and announced another bonus payment this year.
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Your support makes all the difference.Nationwide Building Society has revealed lower earnings over the past year but said it handed out a record amount of cash to its members.
The building society reported a statutory pre-tax profit of £1.8 billion for the year to April 4, down about a fifth from the £2.2 billion reported this time last year.
The lender said the decline was largely due to the £344 million handed out to members in June last year, as well as it passing on interest rate rises to savers.
On Thursday, it also announced it will pay out another bonus to eligible members in June this year, amounting to about £385 million in total.
We've been really pleased with how robust the customers in our society have been, we've seen arrears remain low, a very slight uptick, but we've seen people continuing to spend
The society, like rival high street banks, said that the benefits of higher interest rates were largely offset by a fiercely competitive mortgage market throughout the year.
It also said the housing market has remained subdued in the face of higher borrowing costs.
Chris Rhodes, Nationwide’s finance chief, revealed that the mortgage market was down about 27% over the latest year, with buy-to-let lending plunging nearly 50%.
“As we look forward, we do expect the market to gradually improve, both as affordability improves from falling interest rates, and with wage inflation running ahead of CPI (Consumer Prices Index) inflation,” he said.
“But it is going to be gradual, and as we look at house price data it is going to be a bit lumpy.”
According to the lender’s economic forecasts, house prices could decline by 0.5% this year in a base case scenario.
Debbie Crosbie, Nationwide’s chief executive, said that consumers have been more resilient than previously expected.
“We’ve been really pleased with how robust the customers in our society have been, we’ve seen arrears remain low, a very slight uptick, but we’ve seen people continuing to spend,” she said.
Meanwhile, the company announced earlier in the year that it plans to buy rival lender Virgin Money in a deal worth about £2.9 billion.
It said on Thursday that the acquisition is expected to complete towards the end of this year.
Ms Crosbie stressed that the “large majority of members are very happy” with the deal, which will see it further enter the business banking market.
Nationwide has not offered its members a vote over the acquisition, which Ms Crosbie said it is not required to do under building society rules or its internal governance rules.