Nationwide profit and mortgage lending fall
NATIONWIDE’S first-quarter profit fell by nearly a fifth as the UK’s biggest building society pulled back on mortgage lending and saw a rise in bad debts.
Its net mortgage lending was down from £3.5billion the previous year to £2.4billion as buy-to-let mortgage sales slowed following stamp duty hikes and changes to its own underwriting criteria.
Profit fell from to £322million from £401million in 2016, when it made a £100million one-off gain following the sale of its investment in Visa Europe.
Impairment losses on bad loans rose by £20million to £36million.
Chief executive Joe Garner said profits were “comfortably within our strategic target range” as it invests in improving services and benefits for customers.
It opened 202,000 new current accounts, up 17 per cent on last year, as well as attracting 22.4 per cent of all current account switchers, for a 7.7 per cent market share.
Garner said: “Value and outstanding service has enabled us to attract more customers. We are seeing customers voting with their feet when they see value and service.”
Nationwide expects the UK economy to “slow a little further” this year as household budgets are squeezed by rising inflation.
Garner urged banks and building societies to “balance carefully” the way they lend to consumers ahead of a potential slowdown, but warned against “pulling credit too quickly”.
He said: “Although the public has become less optimistic about the outlook for the economy generally, research shows 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 needs of consumers in a responsible way through any potential economic slowdown ahead.”
He said that Nationwide would continue to invest in products and improvements in service despite competition and a low interest environment “maintaining pressure on margins”.