Mortgage lending falls £3bn for Nationwide

Mortgage lending fell from £8.8bn to £5.8bn, Nationwide’s annual report shows, while overall underlying profit was £1.02bn, slightly down on 2017’s £1.03bn, but “within (Nationwide’s) financial performance framework”. Statutory profit was £977m, down from £1.05bn the year before.

The fall in mortgages was in part fuelled by a planned reduction in buy-to-let mortgages after changes to the tax regime last year, but it also lost market share amid what it called “fierce” competition.

In total, gross group residential mortgage lending stood at £33bn, down from £33.7bn in 2017, with market share falling from 14 percent to 12.8 percent over the same period. Around 0.43 percent of those residential mortgage accounts are in three months or more of arrears, down from 0.47 last year.

The mutual’s profits include the £116m cost of a debt buy‐back, while last year saw a £100m one‐off gain from a Visa Europe disposal.

Total underlying provision charges of £131m, down from £276m the year before, were driven by lower payment protection insurance (PPI) charges.

Impairment losses decreased by to £105m from 2017’s £140m. That fall reflects a prior year charge of £52m in relation to “enhancements to our provisioning methodology, primarily in relation to the credit risks associated with maturing interest-only loans,” the building society said.

That fall was partially offset by the impact of “updating provision assumptions to reflect current economic conditions”, it added. Delinquency levels remained low across portfolios during the period, although it said there is “some limited evidence” of affordability pressures increasing after a period when inflation has exceeded wage growth.

In consumer banking, the value of personal loans remains flat at £2bn, credit card balances at £1.8bn, slightly up from £1.7bn in 2017, while current account overdrafts stand at £0.3bn, marginally up from £0.2bn the year before. In all, four percent of consumer loans are non-performing, Nationwide said.

Impairment provisions have increased to £298m from £269m the year before, reflecting both book growth and the impact of updating provision assumptions to take account of current economic conditions.

Nationwide Building Society chief financial officer, Mark Rennison said: “After investing in our business and in the value we offer to members, our pre‐tax underlying profits were broadly flat at £1.02bn – and within our financial performance framework.

“We expect technology innovation to accelerate, driven by digital adoption, mobile service take-up and Open Banking. We are reviewing our operations and technology to ensure Nationwide can take the opportunities ahead and meet the challenges posed by increasing dependence on technology and growing cyber threats.”