Nationwide predicts higher house prices as profits rise

* CEO Graham Beale to step down in summer 2016

* Internal, external candidates in contention for CEO role

* 2014 underlying profit up 32 percent to 1.2 bln stg

* Warns of possible uncertainty from EU vote (Adds further comments from CEO, recasts)

By Matt Scuffham

LONDON, May 22 (Reuters) - Nationwide's Chief Executive Graham Beale said he expected Britain's housing market to be stronger this year after the UK's second-biggest provider of home loans reported a 32 percent rise in full-year profit.

Nationwide also said Beale would step down in the summer of next year after nine years as CEO during which he guided the lender through the 2007-9 financial crisis and, more recently, launched a revamp of its branches and digital technologies to meet changing customer demands.

Beale told Reuters on Friday that the Conservative party's victory in Britain's national election had removed uncertainty from the market, particularly relating to opposition Labour's pledge for a tax on higher-value properties.

"The uncertainty of the general election and some of the political direction, particularly from the Labour party -- the notion of the mansion tax -- it was clearly influencing and dampening sentiment ahead of the election," Beale told Reuters.

Beale said he expected the market to be stronger this year than in 2014, when a number of factors had a negative impact including measures to cool the buoyant London market and uncertainty over the outcome of the Scottish independence vote.

However, he cautioned that concerns over a possible British exit from the European Union could impact the market.

"My expectation is that it will be a stronger market this year than last year. Provided that borrowers don't start to get concerned about the EU referendum, generally it's a more stable environment," he said.

The chief executive of property website Zoopla said earlier this week that he expected the Conservatives' victory to help the housing market to grow.

Beale, who joined the company in 1985 as a chartered accountant and is 56, will leave Nationwide in a healthy state.

The lender reported a 32 percent rise in underlying profit to 1.2 billion pounds ($1.9 billion) for the year to April 4.

It said its core tier 1 ratio, a key measure of its financial strength, rose to 19.8 percent from 14.5 percent, higher than any major British bank.

Nationwide's net mortgage lending during the year totaled 7.1 billion pounds, accounting for a 31.2 percent market share.

The lender's personal current account market share grew to 6.8 percent and it is targeting 10 percent.

Beale said the Nationwide board will look at both internal and external candidates to succeed him.

"We start off with some very good internal candidates but the board will also look outside," he said.

(Reporting by Matt Scuffham; Editing by Sinead Cruise and Keith Weir)