Nationwide to invest £500m in its branches
Building society commits to keeping counter service
NATIONWIDE building society’s chief executive Graham Beale is to retire next year after reporting record profits of £1.2billion, rising market share at the expense of the banks, and a £500m planned investment in its branch network.
The mutual has rebuilt its balance sheet so strongly that it now believes profits are at “optimal” level with no further increase needed.
Mr Beale, whose nine years at the helm saw him pilot the UK’s biggest society through the crash and swallow up three minnows including the Dunfermline, said: “Nationwide has demonstrated yet again that it is possible to offer a mutual alternative to the established banks, focusing on doing the right thing and operating with fairness, honesty and transparency.
“This is quite a contrast to some of the behaviours seen elsewhere in the industry as evidenced by the fines that have been reported.”
Chairman Geoffrey Howe said Mr Beale, who will retire in July next year, had “led the society safely through the worst financial crisis in living memory and at the same time created a truly modern mutual”.
Nationwide grabbed almost a third of net mortgage lending last year, with a 15 per cent share of first-time buyers and regained its number two position behind Halifax in the home loans market. It took one in 12 of switched current accounts, lifting its market share from 6.2 to 6.8per cent with a 2020 target of 10 per cent, and took a 14 per cent slice of last year’s rise in Isa balances after the ceiling was lifted to £15,000.
It has been ranked first on the high street for customer satisfaction for three and a half years, and despite its size accounts for only 2.5per cent of industry complaints, with only 9 per cent of them upheld. The banking average is 52 per cent.
Now Nationwide is to invest £500m over five years in its 695 branches, 47 of them in Scotland.
Chris Rhodes, retail director, said: “Traditional counter transactions are falling away but when we talk to members, they will want us to be there and provide them with help and advice – they still want to talk to people.”
He went on: “We are investing in technology to make sure advice is available. Some of the big banks see digitisation as a cost-cutting opportunity, taking people out of the branches and putting machines in. We are putting machines in too but we are going to keep the people there and create an environment where you can go and have a conversation.”
Mr Rhodes said there were “no plans to close any branches in Scotland”.
He said 4.5m savers, including 150,000 former customers of the Dunfermline, Cheshire and Derbyshire societies, had seen their rates increased last year as the society simplified accounts, scrapped complicated bonuses and restrictions, and launched a Savings Watch scheme to advise on the best products available.
‘‘ Nationwide has demonstrated yet again it is possible to offer a mutual alternative to the established banks
Mr Beale said Nationwide had upped the stakes in the credit card market with its new offer of interestfree monthly spending for balance transfer customers.
He said loyalty offers had saved members on average £1,100 a year on a mortgage and £150m in total on savings accounts. He admitted, however, that rates had been cut, blaming the base rate, the mortgage market, and Pensioner Bonds.
Mr Beale said: “The thing that will cause savings rates to change is a change in the base rate.”
Mr Rhodes commented: “We are now at a sustainable level of profitability, you should not expect profits to increase.
“It means we can invest £500m a year in the business ... and we are still generating capital to strengthen the balance sheet.”