Yahoo Finance Nationwide warns of 'intense competition' as profits slide
Nationwide Building Society has posted a fall in profits as mortgage lending slumped by a third, with the lender blaming “intense competition” in the market.
The UK’s largest building society reported a 7pc drop in pre-tax profits to £977m for the year to April 4, down from £1.05bn the previous year.
It was Nationwide's second consecutive year of falling profits, after it fell 23pc the prior year, in part because it moved to protect savers from record low Bank of England rates.
Mortgage lending fell by a third to £5.8bn, down from £8.8bn.
The lender said it expected the housing market to remain “subdued” with house price growth slowing to 1pc over the next year.
Savings deposits also grew more slowly, up by £3.5bn compared to an increase of £5.8bn the prior year.
But in other areas Nationwide grew, including in current accounts where it opened a record 816,000, up from 795,000 the previous year.
Nationwide is also looking to expand into business banking and will bid for a portion of the £833m fund stumped up by RBS to boost competition as the price extracted from regulators to keep subsidiary Williams & Glyn.
Chief executive Joe Garner said: "We anticipate modest growth in our core product markets, reflecting the outlook for the economy as a whole.
"With employment growth expected to slow and pressure on household budgets fading only gradually, mortgage lending is likely to rise at a fairly pedestrian pace."
On an underlying basis Nationwide’s profits were down 0.8pc to £1.02bn. The company’s profits the previous year had been boosted by a £100m gain from selling its stake in Visa Europe.
Costs remained flat at just under £2bn, while the company said it gave members a £560m boost by offering better rates, fees and incentives to its customers.
The group said the UK economy would remain "resilient", although it forecasts growth to remain modest at between 1pc to 1.5pc over the next two years.
