Nationwide takes £100m virus hit as profits plunge

NATIONWIDE reported a 40 per cent fall in profit as it booked a hit of more than £100 million from the coronavirus pandemic.

The building society said that underlying profit before tax dropped to £469 million in the year ending April 4. It was £788 million the year before. It came on underlying income of just over £3 billion, down around 4 per cent.

The company had already been seeing pressure on its profits from its investment in technology and payouts for payment protection insurance (PPI) before booking a £101 million hit from Covid-19.

“While the coronavirus impacted our profitability in the last few weeks of the year, there was pressure on margins even before it hit,” said chief executive Joe Garner.

The business has allowed its mortgage holders to apply for payment holidays to help them through the economic downturn.

On a call with reporters on Friday morning, Mr Garner said that many people will have applied for a holiday out of caution.

“Probably the very first people to apply would be those who are really on top of their financial position and we know there are a lot of people who have taken them as a precaution, and will go back to paying in full at the first opportunity,” he added.

Around 280,000 customers have taken a payment holiday with Nationwide, a “vast majority” of which are for mortgages.

The building society has also promised that no-one will lose their home in the next 12 months because of the impact of coronavirus.

The crisis has also enabled people to save more.

While some current account holders are struggling, having seen their income reduced, others are able to put more away because they are spending less by staying at home.

“People who are working and are being paid as normal, they’re just able to spend less,” said Sara Bennison, Nationwide’s chief product and marketing officer.

“People have very front of mind now about why it’s important to save,” she added.

While the property market has taken a serious hit, having dropped by around half according to government statistics, the market is starting to stabilise, Nationwide said.

People are also starting to think about how working from home changes where they want to live.

“We can see people start to factor in that ‘maybe if I’m going to be working from home more, that’s going to influence my choice of home’, and that means different things for different people,” Mr Garner said.

The growth in gardening and DIY products was particularly strong, as Government guidelines kept garden centres closed and rival home improvement retailer B&Q closed to allow for new social distancing measures to be introduced.

Mr Arora added: “We have seen a significant bring-forward of demand in some key categories and the remarkably warm spring weather in the UK has been a major factor behind this during recent weeks.

“We are not expecting this current level of trading to continue as normal shopping patterns resume. Clearly, there is also considerable uncertainty in relation to both the progression of Covid19 and the economic outlook and it is therefore hard to predict future trading levels.”

B&M has also benefited from a 100 per cent business rates holiday this year on all commercial premises in England, although the retailer did not reveal how much it was saving from the deal announced to help retailers whose doors were forced to closed.

B&M has also donated £1 million to UK food banks and a £2 million discount to NHS workers.

Stores in France closed on March 15 and all but two reopened on May 11 following lockdown easing in the country.

CHIEF EXECUTIVE

SIMON ARORA