Nationwide BS  

Nationwide profits hit by price cuts

Nationwide profits hit by price cuts

Profits at Nationwide were down in the third quarter because of the lender's "highly competitive" products.

In its interim management statement for the last nine months of 2016, the building society said underlying profit before tax had reduced 23 per cent to £866m because of a reduction in net interest income on top of growth in underlying costs.

The building society said its net interest margin – the difference between interest received and interest paid out – was down to 1.33 per cent.

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But Nationwide said this had been anticipated and was due to “sustained levels of competition” in the mortgage market combined with continued natural attrition of the residential base mortgage rate balances.

Nationwide’s chief executive Joe Garner said the reduction in profits was due to a decision to “support” its members with highly competitive products.

He said: “Our performance in the third quarter reflects a continuation of our strong trading performance announced at the half year.

“In a period of sustained economic uncertainty our commitment to serve our members remains steadfast and true to our core purpose.

“We continue to take conscious decisions to support our members, delivering market-leading service and highly competitive products, which has led to a financial performance in line with our expectations.”

Gross mortgage lending was up 11 per cent at £26.2bn, representing a market share of 14.3 per cent.

This included £22.5bn of prime residential mortgages and £3.7bn of buy-to-let lending.

Nationwide said more people are also choosing to do their everyday banking with the building society, with 570,000 new current accounts opened – up 36 per cent on the same period in the previous year.