Nationwide to dish out £340m to members after record financial results

- Advertisement -

Nationwide Building Society has reported its strongest financial results on record and said it will be handing out £340 million in payments to eligible members.

But it cautioned over reduced activity in the mortgage market and subdued house prices over the rest of the year.

The mutual lender saw its underlying pre-tax profit surge to £2.2 billon in the year to April, from £1.6 billion this time last year.

Its total underlying income jumped to £4.7 billion from £3.9 billion the previous year.

Some 3.4 million members should benefit from the payment, which the building society said was the first of its kind for the group.

Nationwide said it was about rewarding members “who have the deepest banking relationships with us”, and it is also introducing the Nationwide Fairer Share Bond with competitive interest rates.

The bond, which will have a 4.75% two-year fixed rate, is available to all 16 million members.

But chief executive Debbie Crosbie said the economic outlook remains uncertain and households could struggle to adjust to higher interest payments.

She said the squeeze on household incomes has led to “reduced mortgage market activity and lower house prices which are expected to remain subdued in the second half of 2023”.

She added: “Overall, our borrowers are relatively well placed to withstand challenges in the medium term, given the significant proportion of borrowing on fixed rates, and the relatively low number of borrowers who spend a high proportion of their income on debt repayments.

“However, the transition to higher interest payments is a challenge for households as they adjust their expenditure priorities.

“We will continue to support those borrowers who face payment difficulties.”

TSB online problems
Nationwide’s chief executive Debbie Crosbie, who took over the top job last year, said the transitioning to higher interest rates will be a challenge for mortgage borrowers (TSB/ PA)

But such customers saw their affordability stress tested against rates between 6% and 7% when they took out their mortgage, meaning they could be more likely to withstand higher rates.

Furthermore, the lender stressed that existing customers fixing to a new mortgage can get access rates of around 4%.

The proportion of people falling behind on their monthly mortgage payments remains low, but cost-of-living pressures and higher rates means this level is expected to rise in the future, Nationwide said.

It resulted in a jump in the group’s impairment charges – money set aside to cover expected losses from bad loans – to £126 million over the past year.

It also noted a drop in mortgage market activity, which particularly suffered after September’s mini budget, but said there were “green shoots” of positivity with activity picking up.

The building society is sticking by its pledge to not leave any town or city in which it is based without a branch until at least 2024.

- Advertisement -
- Advertisement -
- Advertisement -

Latest Stories

- Advertisement -

UK News

- Advertisement -
- Advertisement -

Read the latest free supplements

Read the Town Crier, Le Rocher and a whole host of other subjects like mortgage advice, business, cycling, travel and property.