UK's Nationwide first quarter profit more than doubles

Monday 18 August 2014 14.24
Nationwide said its share of UK current accounts rose slightly to 6.4% from 6.2%
Nationwide said its share of UK current accounts rose slightly to 6.4% from 6.2%

Nationwide Building Society, Britain's biggest customer-owned lender, more than doubled its first-quarter profit, helped by improvements to its balance sheet.

Nationwide is Britain's third-largest mortgage lender and second-biggest provider of saving products.

It also said it expected house prices to continue to moderate over the medium term, after showing strong growth earlier in the year and prompting fears of a bubble.

Underlying profit of £263m in the three months to June 30 was up 117% compared to the same time last year. 

Profitability at Nationwide has been steadily improving over the last two years. It has also seen a moderation in impairment charges after reducing its exposure to some commercial real estate. 

Nationwide has been seeking to challenge the dominance of Britain's five biggest banks, wooing customers disillusioned by scandals including the mis-selling of loan insurance and the rigging of benchmark interest rates. 

It has been offering interest of 5% a year on some accounts and has won customers from rivals as a result of new rules making it easier to switch accounts. 

The mutual society, which is targeting 10% market share, said it accounted for 6.4% of the current account market in the first quarter, up slightly from 6.2%. Member deposits increased by £1.5 billion to £132 billion. 

The big five of Lloyds Banking Group, Royal Bank of Scotland, Barclays, HSBC and Santander UK control about 80% of the UK market for personal current accounts.

Data released today by property website Rightmove showed a prediction made by Nationwide CEO Graham Beale in May for a cooling of house prices in London over the summer had been borne out.

After soaring earlier in the year, asking prices in London fell for a third month, dropping nearly 6% between July and August. 

Across the UK, prices of property coming onto the market fell by 2.9% from July. 

Nationwide said a natural correction from the strong growth in prices at the start of the year would probably stay in place in the short to medium term but prices could pick up later. 

It was too early to call the future of prices in London, the building society said, because the higher number of cash buyers and overseas investors make it less predictable. A clearer picture would emerge in the autumn, a more normal period for activity, it added.