Nationwide BSAug 11 2017

Nationwide profits hit by slowing buy-to-let market

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Nationwide profits hit by slowing buy-to-let market

Nationwide Building Society has reported a quarterly fall in pre-tax profits, as its chief executive sounds a note of caution about future lending conditions.

Profits before tax at the building society were £322m for the period 5 April to 30 June, down from £401m for the same period last year, a drop of almost 20 per cent.

The lender stressed the two periods were “broadly consistent”, after allowing for a £26m one-off gain this quarter and a one-off £100m gain for the same time last year.

However even on that basis, profits for the three months to June 2017 are down on a year ago.

Nationwide chief executive Joe Garner sounded an upbeat tone, but tempered it with cautious outlook.

“It will be important for lenders to balance carefully credit supply with affordability as we seek to support the long-term interests of consumers in a responsible way through any potential economic slowdown ahead,” he said in a statement today (11 August).

Gross mortgage lending at the building society was £8.1bn for the quarter, down slightly on the £8.6bn it reported for the same period a year ago.

That gives Nationwide a 13 per cent gross share of the UK mortgage market, according to Mr Garner’s statement.

This was down to a “reduction in buy-to-let advances,” the lender stated.

This was partly because Nationwide changed its underwriting criteria for buy-to-let mortgages.

The buy-to-let market has also slowed in the UK because of tax changes that make it more expensive for landlords to flip properties.

Mr Garner added that consumer confidence is an important barometer for the lender, and one he will be watching closely in the coming months.

“Although the UK public has become less optimistic about the outlook for the economy generally, research conducted for our Brexit consumer support panel shows that the majority of consumers expect Brexit to leave their ability to access credit unchanged,” he said.

“In a period of potentially prolonged economic uncertainty and persistently low interest rates Nationwide continues to invest in products and services to support the long-term needs of our members."