UK nationwide profits rise 9 percent amid mortgage boom

24 May, 2016 12:51 pm

LONDON – Nationwide Building Society (POB_p.L), Britain’s biggest customer-owned lender, reported a 9 percent increase in annual underlying profit as its mortgage lending rose to volumes last seen before the 2007-8 financial crisis.

The growth in lending and declining impairment charges helped underlying profit reach 1.3 billion pounds, Nationwide said on Tuesday.

Britain’s second biggest provider of home loans said net mortgage lending for the year ended April 4 grew to 9.1 billion pounds in 2015, up 28 percent on the previous financial year.

Nationwide said it accounted for more than one third of net lending in the market over its last four financial years.

The lender forecast the UK economy would return to annual growth of 2-2.5 percent once uncertainty surrounding the outcome of next month’s referendum on EU membership is lifted.

“We expect the housing market to remain resilient, with any dampening of activity from modest increases in interest rates offset by a strengthening labour market,” Chief Executive Joe Garner said.

Tuesday’s earnings report is the first under Garner, a former HSBC banker who took over from Graham Beale, who had run Nationwide since 2007.

Beale said in November Nationwide could take advantage of major changes across Britain’s banks, which have to separate their domestic retail banking operations from riskier areas such as investment banking from the start of 2019.

Nationwide is not affected by the new rules, but its six major rivals are, including Barclays (BARC.L) and HSBC (HSBA.L).

Nationwide’s key capital ratio rose to 23.2 percent, the highest level among major UK lenders, from 19.8 percent a year ago. –Reuters

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