Profits slump 62% at Nationwide

20 November 2009 | By Natalie Holt

Nationwide has reported gross UK mortgage lending of £70.5bn for the six months to September 30, almost 47% down on the £132.2bn lent at the same time last year.

The UK’s biggest building society and third largest mortgage lender has reported an underlying pre-tax profit of £117m, down from £322m in September last year.

Profits were boosted by a £40m gain on the acquisition of Dunfermline Building Society, and take into account the £1m cost of the Financial Services Compensation Scheme.

The lender took an 8.3% share of the gross residential mortgage market in the half year to September, representing £5.8bn in gross residential lending from £10.9 bn the previous year.

New business was writen at an average LTV of 63%.

Graham Beale, chief executive of Nationwide, says: “Looking ahead we expect the remainder of this year and next to present a very difficult trading environment.

“Economic recovery is forecast to be slow and we expect interest rates to remain at their current level until at least Q4 2010.”

Mortgage in arrears by three months of more accounted for 0.66% of Nationwide’s book, against the Council of Mortgage Lenders’ industry average of 2.40%

Prime lending accounts for 86% of Nationwide’s residential mortgage book.

As at September 30 there was £110.4bn worth of prime residential mortgages on the lender’s balance sheet, and £18.4bn worth of specialist mortgages.

Nationwide’s balance sheet also includes primes totalling £4.9bn following the acquisitions of the Cheshire, Derbyshire and Dunfermline portfolios.

Specialist residential mortgages represented £15.3bn of advances made through The Mortgage Works and UCB Home Loans Ltd and £3.1bn arising from the acquisitions of the Cheshire, Derbyshire and Dunfermline brands.

Buy-to-let made up 64% of total specialist lending, 25% for self-cert, 8% relates to near prime and 3% for sub-prime.