Nationwide sees profits decrease to £1.8billion, down about a fifth from last year

Nationwide Building Society has revealed lower earnings over the past year

Nationwide Building Society has reported a decrease in earnings over the past year.

The building society announced a statutory pre-tax profit of £1.8 billion for the year ending April 4, marking a decline from last year's £2.2billion. Nationwide, like its high street bank competitors, said that the advantages of higher interest rates were largely negated by an intensely competitive mortgage market throughout the year. It also noted that the housing market has remained subdued due to increased borrowing costs.

The lender attributed the decrease in revenues largely to the £344 million given to members in June last year and the impact of passing on interest rate increases to savers. In addition, it revealed plans to distribute another bonus to eligible members this June, totalling about £385million.

Chris Rhodes, Nationwide's finance chief, disclosed that the mortgage market had declined by about 27% over the past year, with buy-to-let lending dropping 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.

However, he warned that recovery would be gradual and uneven, as indicated by house price data. According to the lender's own predictions, house prices could fall by 1.1% between December 2023 and December 2024. Debbie Crosbie, Nationwide's chief executive, said:. "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, Nationwide announced earlier this year its plans to acquire rival lender Virgin Money in a deal estimated at about £2.9billion. The acquisition is expected to be finalised by the end of this year.

Ms Crosbie emphasised that the "large majority of members are very happy" with the deal, which will see Nationwide further penetrate the business banking market. Despite not offering its members a vote over the acquisition, Ms Crosbie stated that it is not required under building society rules or its internal governance rules.