Nationwide sees profits fall 46%

26 May 2010 | By Natalie Thomas

The UK’s largest building society Nationwide has reported underlying profits before tax of £212m, down on last year’s £393m.

The society has blamed low interest rates for the fall in profits for the year to April 4.

Its share of the mortgage market has also fallen slightly to 8.7% from 9% in 2009.

Nationwide’s Base Mortgage Rate is guaranteed to be no more than 2% above base rate.

At 2.50% it estimates the cost of maintaining its BMR at this level relative to other rates charged in the market has been in excess of £450m over the past year.

It lent £12bn of mortgages last year and also reduced the minimum customer deposit for house purchase from 15% to 10%.

It had residential mortgage accounts more than three months in arrears of 0.68%, compared with 0.64% in 2009 - less than a third of the Council of Mortgage Lenders industry average of 2.22%.

Graham Beale, chief executive of Nationwide, says: “Over the year, many of our mortgage borrowers have enjoyed a very low Base Mortgage Rate and others have benefited from our pledge not to enforce the contractual tracker floor rate.

“I am encouraged to see that the new government intends to bring forward proposals to “foster diversity, promote mutuals and create a more competitive banking industry”.

“This is against a backdrop of public and political pressure on regulators to be seen to act decisively to prevent a repeat of the recent financial crisis. We support the objective of a more secure and stable framework for banking regulation.

“However, it is vital that this framework is developed with the interests of the mutual sector in mind. It must not undermine the competitive position of the sector, and must avoid the unintended consequences that may arise from a ’one size fits all’ approach to regulation. It is essential that we work together to protect building societies, and their members, for the future.”

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Readers' comments (11)

Anonymous | 26 May 2010 10:32 am
The Nationwides share of the mortgage market dropped over the last year. At a time of fewer lenders and low levels of remortgage business could this indicate the level of influence of the broker market? They continue to dual price at 90% LTV / existing account holding customers however it would appear the numbers being drawn to this are not what they had hoped. And a drop in market share with a SVR of 2.5%?
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Steve Rodley | 26 May 2010 10:35 am
Perhaps if they hadn't adopted a dual pricing policy they would still have the backing of advisors and therefore possibly more business....

Unfortunately for them, I have a long memory and try my utmost NOT to put business their way!!!!!
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Anonymous | 26 May 2010 11:07 am
I used to use them a lot, then came service centres and not branches, dual pricing, and higher income multiples if someone went direct to them. They bit the hand that fed them now they are reaping the results.
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John Tidswell | 26 May 2010 11:30 am
I agree with Steve Rodley, I avoid all lenders that are duel pricing, this includes the Abbey, Halifax and C&G. I do my very upmost to use lenders that are not duel priceing
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Anonymous | 26 May 2010 12:20 pm
I just hope John is not purporting to be a whole of market adviser then.....
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Steve Rodley | 26 May 2010 12:35 pm
Anon: -

You can always justify WHY you don't use that particular lender on that occasion and still be WOM.....
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Steve Rodley | 26 May 2010 12:35 pm
Anon: -

You can always justify WHY you don't use that particular lender on that occasion and still be WOM.....
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Anonymous | 26 May 2010 5:58 pm
If you avoid Nationwide, Abbey, Halifax and C&G, then it begs the question who you do use because you have just discounted 90% of the prime market! If you don't refer business to direct only lenders such as HSBC that rules out even more of the market. Do you know something we don't?
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Mark Sutton | 26 May 2010 6:18 pm
I am a broker and a Nationwide mortgage holder and went on to the BMR earlier this year. Since then I have been bombarded with letters and the odd phone call asking me to take a new product from them. However in the small print it states that if I take a new product I will not revert back to the BMR in the future. The BMR is far better than the SVR, so how can this be treating customers fairly and how many of their customers have unwittingly fallen into this trap I wonder? Not me thats for sure!
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Mark Sutton | 26 May 2010 6:18 pm
I am a broker and a Nationwide mortgage holder and went on to the BMR earlier this year. Since then I have been bombarded with letters and the odd phone call asking me to take a new product from them. However in the small print it states that if I take a new product I will not revert back to the BMR in the future. The BMR is far better than the SVR, so how can this be treating customers fairly and how many of their customers have unwittingly fallen into this trap I wonder? Not me thats for sure!
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