Nationwide pleased with progress as profits remain 'consistent'

Nationwide Building Society reported a dip in profit before tax for the first quarter on Friday, to £322m in the period from 5 April to 30 June, compared to £401m in the same period last year.

The UK’s largest building society described profit levels as “broadly consistent” with the prior period, after allowing for £26m in one-off gains in this quarter and a £100m non-recurring gain in the first quarter last year.

Its interim management statement showed an improved capital strength, with a CET1 ratio of 26.4% compared to 25.4% at the start of the quarter, and a UK leverage ratio of 4.4%, which was unchanged from 4 April.

The high street lender said it remained number one for customer satisfaction amongst its peer group, with a lead of 3.6%, and it claimed more people opened a current account with Nationwide than with any other provider, with more than one in five of all switchers reportedly choosing Nationwide.

Gross mortgage lending stood at £8.1bn - down from £8.6bn year-on-year - inclusive of prime mortgage lending of £7.3bn - up from £6.9bn.

Nationwide had a total mortgage market share of 13.0%, slipping from 15.0% a year ago.

Member deposit balances increased by £1.3bn in the period, which was down significantly from £2.6bn a year ago, with a market share of balance growth of 10.2%.

“Profit performance in the first quarter remained comfortably within our strategic target range and, after allowing for one-off items, was broadly consistent with the prior period,” commented Nationwide chief executive Joe Garner.

“Nationwide continued to bring the benefits of mutuality to more people.

“Independent research shows that in the first quarter we remained the UK's top choice for current accounts.”

Additionally, Garner pointed out that the society ended 2016 as the “highest net gainer of current accounts”, with more than twice as many net switchers as any other provider/

“[This was] the first time … a building society has overtaken the banks,” he added.

Garner said Nationwide continued to enjoy a “healthy share” of mortgage lending, with a gross market share of 13.0%.

He said it also introduced new steps to make membership more meaningful, offering an increased choice of preferential rates to “loyal savers”, and extending its 'recommend a friend' scheme.

“Nationwide remains number one for customer satisfaction among our high street peers, with our lead of 3.6% reflecting our commitment to member value and first class service.”

"Consumer confidence was an important barometer for the society, Garner added, saying that although the UK public had become less optimistic about the outlook for the economy generally, research conducted for its ‘Brexit Consumer Support Panel’ reportedly showed that the majority of consumers expect Brexit to leave their ability to access credit unchanged.

“It will be important for lenders to balance carefully credit supply with affordability as we seek to support the long-term interests of consumers in a responsible way through any potential economic slowdown ahead.

“In a period of potentially prolonged economic uncertainty and persistently low interest rates Nationwide continues to invest in products and services to support the long-term needs of our members.”