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Nationwide Building Society on Thursday reported lower earnings over the past year but said it handed out a record amount of cash to its members. The Swindon, Wiltshire-based mortgage lender reported pretax profit of £1.78 billion for the financial year that ended April 4, down 20% from the £2.23 billion in financial 2023. 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 an underlying basis, pretax profit still was down by 10% to £2.00 billion from £2.23 billion, amid flat total income of £4.66 billion compared to £4.67 billion and higher provisions. On Thursday, Nationwide announced it will pay out another bonus to eligible members in June this year, amounting to about £385 million in total. 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 [consumer price 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 own forecasts, UK house prices could decline by 1.1% between December 2023 and December 2024. 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 UK PLC in a deal worth about £2.9 billion. It said on Thursday that the acquisition is expected to complete in the fourth quarter of this year. Virgin Money shareholders voted in favour of the deal at a general meeting on Wednesday. Nationwide’s 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 Crosbie said it is not required to do under building society rules or its internal governance rules. Nationwide on Thursday said it expects to retain a strong balance sheet following the acquisition, with a forecast CET1 ratio of about 20%. Virgin Money shares were down 0.3% at 212.60 pence early Thursday in London. source: PA Copyright 2024 Alliance News Ltd. All Rights Reserved.
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