Digital and mortgage rivals hit Nationwide
NATIONWIDE is prepared for more financial hits to stay competitive in Britain’s cut-throat mortgage market after profit fell by a fifth in the first nine months of the financial year.
The UK’s biggest building society is also ramping up spending on technology to thrive in a digital banking age, which along with asset write-offs dragged its third-quarter profit over 20 per cent lower to £703million.
It is investing £1.3billion over five years on technology, but chief executive Joe Garner reaffirmed its commitment to high street banking, where it has about 650 branches.
Nationwide grew current accounts by 5.5 per cent to 7.7 million as it attracted over one in five people switching their account.
It hailed the success of its single access and loyalty ISAs as deposit balances grew from £2.3billion to £5.9billion and gross mortgage lending was up £2.7billion to £26.8bilion as it helped 59,400 firsttime buyers.
But net interest margin – the difference between the interest paid to those putting money in and what it receives from those taking out loans – fell from 1.33 per cent to 1.26 per cent.
Garner said: “As consumers continue to benefit from considerable choice, we intend to remain competitive and thus expect that margins will continue to moderate in retail lending markets generally, and particularly in relation to both prime and buy-to-let mortgages.”
He added: “As a mutual we are different in having more scope to make decisions in the long-term interest of our members. We took the conscious decision to increase significantly our investment in the Society in the full knowledge that it would impact profitability in the short-to-medium term but would be of long-term benefit to our members.
“This investment is to ensure we can continue to meet our members’ changing needs in an increasingly digital future, but we remain committed to and are investing in our presence on the high street.
“We are confident that our financial strength means we can continue to support members, as we have always done.”