Nationwide profits dented by interest rate cut

Nationwide's profits were hit after it passed on the base rate cut to mortgage customers. Picture: Greg Macvean

The building society said statutory pre-tax profits fell to £696 million in the six months to 30 September, down from £802m for the same period last year.

However, the mutual said trading was “strong” for the half year, with gross mortgage lending jumping 17 per cent to £17.5 billion.

Chief executive Joe Garner, who took the top job in April, said: “We have made a number of pledges to help our savers and borrowers. These include protecting selected savings rates to minimise the impact of the base rate change and helping our members with variable rate mortgages by passing on the base rate decrease in full.”

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He added: “These conscious decisions and those taken over recent years have contributed to a reduction in profits in the first half of the year in line with expectations, demonstrating our commitment to putting members’ interests at the heart of everything we do.”

Net mortgage lending notched up its “best ever” performance, rising 46 per cent to £6bn over the period, while the number of current accounts opened climbed 36 per cent to a record high of 377,000.

However, total underlying income also edged lower, dropping 2 per cent to £1.6bn for the half year, from £1.7bn in 2015.

On Brexit, Nationwide said demand and supply in the housing market was “well-matched”, but there had been a modest slowdown in activity since the EU referendum on 23 June.

It said the “less certain economic outlook may soften demand but prices will continue to be supported by low interest rates and limited supply of new homes”.

The Bank of England kept interest rates on hold at their record low of 0.25 per cent earlier this month, having cut them from 0.5 per cent in August.

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