Nationwide Building Society saw its underlying profit before tax for the quarter down 6 per cent at £368m, with underlying costs and an increase in impairment provisions blamed.
Between 5 April to 30 June, noted statutory profit before tax was up 6 per cent at £401m.
The building society stated it continues to review compliance with ongoing and emerging regulatory matters, including consumer credit legislation, and have recognised a net provision charge of £13m in the quarter in respect of potential customer redress.
Current provisions reflect latest experience and the estimated impact of industry consultation, it added.
Gross mortgage lending for the quarter was up by 26 per cent to £8.6bn, representing a market share of 15 per cent.
The average loan-to-value of new lending was broadly in line with the same period last year at 70 per cent. Net lending of £3.5bn increased 67 per cent and represented a market share of 52.8 per cent.
Gross and net mortgage lending included buy-to-let lending of £1.7bn and £900m respectively.
“Following the announcement of tax changes relating to buy-to-let income, the group has made changes to its affordability assessment to ensure borrowing for customers remains affordable,” the statement noted.
“An expected contraction in the buy-to-let market, combined with our underwriting changes, is likely to lead to lower levels of new lending for the remainder of the year.”
Finance director Mark Rennison described the second quarter performance as “satisfactory”, noting margins have trended lower as a result of competition in the mortgage market.
“Our range of mortgage products is very competitive and we reserve the best rates for our existing customers as a demonstration of the value we place on their loyalty,” he added.
Chief executive Joe Garner confirmed the society will pass on the Bank of England base rate decrease in full to existing base mortgage rate, standard mortgage rate and tracker mortgage customers.
The results mentioned that while it is too early to make clear impact assessments about the EU referendum outcome, the uncertainty generated could adversely impact investment decisions and consumer spending, with a consequent impact on broader growth in the near term.
“The sustained low interest rate environment and competition in core markets will maintain pressure on margins and we anticipate profits are likely to moderate in the period ahead,” the document read.
“Nevertheless our mutual model combined with our financial strength means we are able to focus on taking a long-term view for the benefit of members, rather than actions to drive short-term profitability.”
peter.walker@ft.com
