Nationwide Building Society has seen statutory profits up 23 per cent to £1.27bn over the year to 4 April, driven by a 20 per cent increase in gross mortgage lending to £32.6bn.
The company’s preliminary results also revealed net mortgage lending up 28 per cent to £9.1bn, from £7.1bn a year earlier.
This meant total assets have grown by £13bn to £209bn at the start of April, largely attributable to £9.3bn growth in residential mortgage lending, cementing Nationwide’s position as the second largest mortgage lender in the UK.
Chief executive Joe Garner noted the gross mortgage advances and net lending figures represent market shares of 13.7 per cent and 21.4 per cent respectively.
“We have played a major role in supporting borrowers in the buy-to-let market, in which we have maintained our position as the second largest lender.
“We recognise that buy-to-let has come under regulatory and political scrutiny in recent times, including significant changes to the tax regime governing mortgage interest tax relief which come into effect from 2017,” he noted, adding Nationwide has taken a lead by increasing rental cover requirements to ensure loans are affordable, and by reducing the maximum loan to value for new buy-to-let loans.
Elsewhere, the results detailed an increase in underlying costs by £170m to £1.79bn, reflecting business growth, focus on risk control and continued investment in new and enhanced products and services.
The building society holds provisions for customer redress to cover the costs of remediation and redress in relation to past sales of financial products and post sales administration.
A £127m charge in the period predominantly relates to updated estimates for provisions previously recognised, with £95m of the increase relating to payment protection insurance.
As for the Financial Services Compensation Scheme, this charge has reduced by 45 per cent to £46m, reflecting the group’s expected share of interest costs in relation to the 2016 to 2017 scheme year and final confirmation of previous scheme year charges.
As for the outlook, the statement noted clear evidence of more sustained competition within the mortgage market, resulting in further margin pressure during this year and the next, which is anticipated to mean moderated profits in the period ahead.
Nationwide’s chairman David Roberts thanked outgoing chief executive Graham Beale for his “huge contribution” and welcomed Mr Garner.
“Joe stood out as someone with a deep understanding of the sector, who has championed customer interest throughout his career, and who will set the strategic direction for the society and our people.”
peter.walker@ft.com
