The Nationwide Building Society has reported that statutory profit for the first six months of the year were £516m, down 17% on the £628m figure for the same period a year ago.
The UK’s largest mutual said record numbers of first time buyers chose a mortgage with Nationwide.
Gross prime mortgage lending was £15.2 billion, compared to £15.0 billion 12 months ago.
It increased gross buy-to-let lending to £2.1 billion (H1 2017/18: £1.7 billion).
Joe Garner, chief executive at the Nationwide Building Society, said: “Nationwide Building Society exists to serve our members, communities and society. In the last six months, we have continued to grow strongly, our members have continued to benefit from competitive rates, attractive products and leading service, and we have improved our already robust financial position. The strength of our business means we are well placed to invest confidently in the future of the Society, and we have committed to invest an additional £1.3 billion over the next five years to transform our technology estate and capabilities. This will take our total investment over the next five years to £4.1 billion and will ensure the Society makes the most of the opportunities ahead. We will develop new propositions, further enhance our service, simplify our operations and build new skills for the future.
“This conscious decision to increase our investment is underpinned by the continued strength of our performance over the last six months. We continue to lead our high street peer group for customer satisfaction by a significant margin1. We protected savers and rewarded loyal members, delivering £330 million in member financial benefit through better rates, fees and incentives than the market average over the half year. The special rate ISA, available exclusively to our loyal members, contributed to a £5.1 billion rise in deposits. We continued to support first time buyers, helping a record 40,500 into a home of their own – 1 in 5 of all first time homeowners. And more people are choosing Nationwide for their everyday finances, with almost 400,000 current accounts opened with us so far this year.
“Our success in the personal current account market, where we have grown accounts by 70% in the last five years, has given us the confidence to accelerate our entry into the business banking market. The funding available from the Banking Competition Remedies remains important to us as it will allow us to bring our proposition to market faster and with greater impact.
“50,000 members a year ask us to provide business banking, and we believe we can offer a compelling mutual alternative to Britain’s currently underserved 5.6 million small businesses. Nationwide is here for the long term and we believe we can make a lasting difference in this market, as we have in the personal current account market, thanks to the combination of leading service and good value we can offer. This is the logical next step in bringing mutuality to more people.
“Our first half profits were lower than last year because we have chosen to increase our investment in the future of our Society. As a mutual, we do not judge our success by profit growth alone, but by how we manage our profits to serve our members’ interests. We do that by maintaining the high-quality service and excellent value products our members prize today, while also investing in building new propositions, services, and skills, so we can meet members’ future needs.”
Mark Rennison, chief financial officer at the Nationwide, added: “These results show that Nationwide is built to last and continues to provide a secure home for members’ money. Trading was strong in the first six months and we have strengthened our CET 1 capital ratio to 31.7%, and UK leverage ratio to 5.0%. This performance gives us the confidence to increase our investment in our future, which will allow us to pursue new opportunities for the benefit of our members.
“As a building society we do not aim to maximise profit and our decision to increase investment was in the full knowledge that it would impact on our profitability. If we exclude the charge we’ve recognised for asset write-offs and incremental technology spend, profits are in line with last year and we have held costs flat while servicing rising business volumes. We have continued to make the Society more efficient and are not only on track to deliver our targeted sustainable saves but have also set a more ambitious target for saves by 2023.
“As a mutual we take decisions on rates that are in the long-term interests of our membership, rather than pursuing short-term gain. We anticipate this, and the competitive market, will lead to further pressure on margins in the second half of the year. Despite the uncertain political and economic environment, our financial strength gives us confidence that we can continue to be there for our members in the months and years ahead in the same way that we have always been.”