Nationwide Building Society profits more than double on strong

On Jan 16, 2022

Mortgage lending grew by £5.5bn to £18.2bn on the back of a buoyant housing market

Nationwide Building Society saw its interim profits more than double as strong demand for mortgages boosted lending.

The mutual, which is owned by its 16.3mln members, reported pre-tax profit of £853mln for the six months to 30 September 2021 compared with £361mln in the same period last year, on net interest income of £1.7bn, up from £1.4bn.

Mortgage lending grew by £5.5bn to £18.2bn on the back of a strong housing market buoyed by pent-up demand due to the COVID-19 pandemic and the stamp duty holiday.

However, strong competition in the mortgage market led to a dip in Nationwide’s market share to 11.4% from 12%.

Its share of the deposit market rose to 9.6% from 9.4% following 13.4% growth in deposits to £7.1bn.

With the improving economic outlook, the company released £34mln of credit provisions which it had set aside to cover potential bad loans during the pandemic.

Switching incentives, such as offering customers £100 to switch to a Nationwide account, helped the building society grow its current accounts to 8.7mln from 8.5mln.

Commenting on the outlook for the housing market and interest rates, Nationwide chief executive Joe Garner said: “It is unclear how the economy will respond to the winding down of government support, and how long it will take for bottlenecks in global supply chains and domestic capacity constraints to ease. If the jobs market weakens post-furlough, it is likely to have a knock-on effect on the housing market, especially as inflation is likely to remain high in the coming quarters, eating into households’ disposable income.

“If the recovery remains resilient, higher interest rates are likely to exert a moderating influence on the housing market, as well as dampening price pressures across the economy more generally. Households appear well-placed to withstand an increase in interest rates, given the significant proportion of borrowing on fixed rates, and the relatively low number of borrowers who spend a high proportion of their income on debt repayments.”