Mortgage frenzy sees Nationwide Building Society bank doubling in profits

Nationwide Building Society has seen its profits more than double thanks to higher lending margins on mortgages approved during the pandemic.

Pre-tax profits for the six months to the end of September topped £853 million compared with £361m a year earlier, results from the high street mutual revealed.

The group said it had been buoyed by its decision to keep lending at the start of the pandemic while rivals pulled back.

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Nationwide is the second-biggest mortgage lender in the UK after Bank of Scotland-owner Lloyds Banking Group, with gross mortgage lending during the period rising by £5.5 billion to £18.2bn, although its market share dipped from 12 per cent to 11.4 per cent. More than £5bn was lent to first-time buyers.

High street mutual Nationwide Building Society retains a sizeable branch network across the UK. Picture: Greg Macvean

Profits were also boosted by the release of £34m of the £139m held back in provisions during the Covid crisis.

Chief executive Joe Garner said: “Early in the pandemic we made decisions to stand by our members and to protect our financial strength.

“Over the last six months we have focused on providing highly competitive products for our mortgage and savings members.

“These have been very popular, resulting in a successful ISA season, increased deposits, higher mortgage lending, and a larger share of the current account market.”

The lender, which rescued the Dunfermline Building Society during the financial crisis, recently kicked off the search for a successor to Garner as he looks to step down after more than five years at the helm.

He added: “During the pandemic, strong demand for mortgages, coupled with macro-economic uncertainty, led to higher margins on mortgage lending. This resulted in significantly higher income, and a very strong overall financial performance.

“Net interest margin improved, but is unlikely to be sustained at this level in future due to intense competition in the mortgage market.”

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Net interest margins nudged up from 1.15 per cent to 1.24 per cent, although finance chief Chris Rhodes said the higher levels would fall back over time and were “a bit of a one-off”.

ISA savings products also performed strongly and deposits rose by £7.1bn in the period under review.

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