Nationwide makes branch pledge as profits hold steady at UK’s second biggest mortgage lender

Nationwide Building Society has seen its half-year profits hold steady despite it putting aside £139 million for loan provisions due to coronavirus.

The Nationwide Building Society extended its pledge not to leave any town or city in the UK where it has a branch until at least 2023. Picture: Greg Macvean

The high street mutual reported underlying pre-tax profits of £305m for the six months to the end of September, down marginally from £307m a year earlier. On a reported basis, half-year pre-tax profits lifted 17 per cent to £361m.

The society booked a £139m charge for loans that may not be repaid due to the pandemic and warned the outlook for the wider economy remains “unpredictable”.

The group, which rescued the Dunfermline Building Society during the financial crisis, said the support offered to customers in financial difficulty means that its arrears have so far stayed largely steady.

It has provided 246,000 mortgage payment holidays and promised that no-one will lose their home in the next 12 months because of the impact of coronavirus.

It also extended its pledge not to leave any town or city in the UK where it has a branch until at least 2023.

The UK’s second biggest mortgage lender saw net lending – gross loans less redemptions – nearly halve to £1.6 billion in the first-half period.

But it said the property market boom since the spring lockdown and stamp duty holiday saw approvals surge, with levels in September 39 per cent higher than the 2019 average.

Joe Garner, chief executive of Nationwide, said: “Our strong financial position, bolstered by our long-term commitment to the mortgage market, has enabled us to stand by our members and colleagues during this difficult and uncertain time.

“To that end, we’ve provided 246,000 mortgage payment holidays, frozen repossessions and offered interest-free overdrafts. We’ve also spoken to a quarter of a million members about their individual circumstances since March.

“Our high streets need support more than ever and so we have recently extended our branch promise to keep a branch in all the towns and cities we are in today until at least 2023. This helps preserve access to services, as well as a sense of community and the vital human connections that are so important just now.

He added: “Looking back on the last six months I feel tremendous gratitude and appreciation for our people who have worked so hard to deliver these results, and to our members for their loyalty and understanding.

“I am also pleased that these efforts were again recognised by Which? who awarded Nationwide the Banking Brand of the Year 2020.”

“Set against the backdrop of a stable profit performance year on year, I am very much encouraged by our ability to continue to stand by our members at this important time.”

The society’s net interest margin – a key measure for retail lenders – has stabilised after falling for four years as it slashed savings rates following the cut in the official bank base rate to just 0.1 per cent in response to the Covid crisis.

Nationwide has also been trimming costs within the business – down by £92m to just over £1bn – and said it would look to drive further efficiencies.

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