Business

Nationwide profits fall 16 per cent to £946m as 'economic uncertainty' continues

Nationwide reported falling profits amid what it called a period of "sustained economic uncertainty" and rock-bottom interest rates
Nationwide reported falling profits amid what it called a period of "sustained economic uncertainty" and rock-bottom interest rates Nationwide reported falling profits amid what it called a period of "sustained economic uncertainty" and rock-bottom interest rates

BRITAIN'S second-biggest mortgage provider Nationwide has reported falling profits amid what it called a period of "sustained economic uncertainty" and rock-bottom interest rates.

The building society said statutory pre-tax profits in the first nine months of the year dropped 16 per cent to £946 million.

But it boosted lending to home-owners by 11 per cent to £26.2 billion over the period thanks to rising deposits from its savers.

It expects UK economic growth to slow over the next two years and ultra-low interest rates to "put pressure on margins and profit", with chief executive Joe Garner flagging "sustained economic uncertainty".

The Bank of England halved rates to 0.25 per cent and unleashed a mammoth economy-boosting package in August to see off the threat of an expected sharp slowdown.

But Mr Garner said trading in the third quarter remained "strong" and that gross mortgage lending increased by 11 per cent to £26.2 billion in the nine months to December 31, resulting in a market share of 14.3 per cent.

Deposit balances increased by £6.4 billion.

Mr Garner added: "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."

Nationwide said the net interest margin, which reflects the gap between what the society pays savers and what it charges borrowers, declined to 1.33 per cent from 1.56 per cent and it expects low rates to continue to squeeze margins.

In a further sign of the worsening outlook for the economy, Nationwide said it booked £111 million of provisions against losses on loans for the nine months, up from £9 million in the same period the previous year.