Nationwide to withdraw from commercial property to focus on lending to homeowners

THE new boss of Nationwide is withdrawing Britain’s biggest building society from the commercial property lending market, as the Brexit vote starts to rattle the sector.

Nationwide has been shrinking its commercial real estate division in re- cent years, taking its portfolio of assets down to £2.7bn from £13bn in 2011. Joe Garner, who joined the building society from BT Openreach in April, said he had decided to run-off the group’s remaining portfolio to focus on savers and lending to homeowners.

“I’ve taken the opportunity coming in to ask the question: ‘does this funda- mentally align with our core purpose’,” he said. Earlier this week, Great Portland Estates and British Land reported that the European Union referendum in June had hit property values in the commercial property sector.

Nationwide said yesterday that “most forecasts are predicting modest falls” in the sector although Mr Garner said the pull-out decision would have been made “regardless” of the referendum.

It came as the mutual posted a 13.2pc slide in half-year profits to £696m, a drop that it blamed on the low interest rate environment, which is squeezing lenders’ net interest margins as well as rising costs as it invests in a new smartphone app and a videolink service for customers in its branches, and an increase in impairments on bad loans.

Gross lending by Nationwide’s buy-to-let division dipped to £2.8bn in the six months to the end of September from £2.9bn a year earlier. Mr Garner said the decline was caused by tougher new affordability tests on landlords.

Gross mortgage lending advanced 17pc to £17.5bn and net lending jumped 46pc to £6bn, which Nationwide said represented its “best period ever”. The number of new current accounts opened climbed 36pc to 377,000, which was a record for the mutual. It also announced an initiative to open sites in areas with no bank branches left, starting with Glastonbury next year.