Building society Nationwide has seen its annual profits fall by nearly a quarter after cushioning savers from rock-bottom interest rates.
The high street lender also ruled out large-scale redundancies after reviewing its strategy in the period to make sure it “remained fit for the future”.
We’ve brought mutuality to more peopleJoe Garner
The society reported that underlying pre-tax profits dropped to £1.03 billion from £1.34bn for the year to 4 April, after the Bank of England cut rates to 0.25 per cent after the Brexit vote.
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Nationwide said it gave members a £505 million boost by keeping its savings deposit rates higher than rivals’ while passing on the base-rate cut to mortgage borrowers in full.
Chief executive Joe Garner said: “We’ve delivered a high level of profitability, at over £1bn for a third consecutive year, we’ve managed our profits in our members’ interests, delivering a financial benefit to our members of over £500m, and we’ve brought mutuality to more people, delivering a record high in terms of total membership as well as our current-account growth.”
Its member deposit balances grew by £5.8bn while it saw a record 795,000 current accounts open, up 35 per cent, to reach about 5.5 million current accounts in total. Membership hit a new high of more than 15 million.
The group also said it would be injecting £80m into its branch network, which Garner said “will continue to evolve but… it has remained broadly stable and what we’re finding is that part of the reason we’re growing as rapidly as we are is that people really value the people in our branches”. It comes as high street peers such as Lloyds have continued to whittle down their networks.
Nationwide, which rescued Dunfermline Building Society in 2009, said it saw no different trends in Scotland, but has a “significant presence” north of the Border, where it employs nearly 1,000 people.
During the year, the group disposed of its share in Visa Europe, resulting in a £100m gain, and will stop offering car insurance from June, saying the latter does not tie in with its “core purpose”.
The society was also asked if it would be interested in buying any parts of the Co-op Bank. Garner said: “We don’t have an appetite to acquire the Co-op Bank in its entirety… quite a lot of customers have switched to us from the Co-op because they value our mutuality.”
• READ MORE: City sceptical as Co-operative Bank put up for sale
As for whether Nationwide would be cutting any jobs as it focuses on efficiency, Garner said it had no large-scale redundancy programmes on the cards, but as it evolves, some areas will expand and others shrink.
It said it was seeing “tentative” signs of a slowdown in the wider economy, with Brexit-fuelled inflation affecting household spending, but was optimistic overall. Garner said: “The strength of our performance means that the society is well placed to continue to support members during a period of uncertainty.”