Digital banking costs take bite out of Nationwide’s profits
A PUSH into digital banking has contributed to profits falling by a fifth at Nationwide Building Society, after it was forced to take a write-down on existing technology investments.
The UK’S largest building society, which last year promised to pump £1.3bn into new technology over five years, said profits for the nine months to Dec 31 plunged 21pc to £703m.
It blamed the drop on a £167m charge linked to writing down the value of IT systems as well as the extra spend on digital banking, which comes at a time when online-only banks are increasingly popular.
Joe Garner, chief executive of Nationwide, said there were no plans to shut branches, in contrast to other high street lenders, which have closed swathes of sites.
The mutual batted away the fall in profits by saying it is run for the benefit of its members – “not shareholders” like some of its rivals – and was happy keeping annual profits at between £900m and £1.3bn in the near term.
Mr Garner added: “As a mutual we are different in having more scope to make decisions in the long-term interest of our members.”
Nationwide also said that mortgage lending grew, rising from £24.1bn during the nine months to the end of Dec 2017 on a gross basis to £26.8bn for the same period in 2018, as it helped 59,400 first-time buyers buy a home.
The mutual said this accounted for about 12.9pc of the mortgage market, a rise of 0.6 percentage points.
The amount written off on bad loans during the three months fell by £10m to £69m, showing that borrowers are increasingly able to keep up with mortgage repayments.
However, it warned that the economic outlook remained “unusually uncertain due to Brexit”, which could significantly affect future performance.
Mr Garner said late last year that the property market was “pretty much at an all-time low” as Brexit was partly to blame for holding back investment and dampening activity among buyers and sellers.