Nationwide profits steady despite £139m Covid-19 hit

Nationwide Building Society has seen half-year profits hold up despite putting aside £139 million for loan losses due to the pandemic.

The mutual lender reported underlying pre-tax profits of £305 million for the six months to September 30, down slightly from £307 million a year earlier.

On a reported basis, half-year pre-tax profits rose 17% to £361 million.

But the group booked a £139 million charge for loans that may not be repaid due to the coronavirus crisis and warned the outlook for the wider economy remains “unpredictable”.

Joe Garner, chief executive of Nationwide, said: “Looking ahead, as and when Government support winds down, it is clear that many more people are likely to lose their jobs and family finances will come under strain.”

He added: “It is very hard to predict what will happen to the economy, jobs and the housing market in the near future as a result of the pandemic and Brexit.

“The scale of interventions to support people and jobs to date has been extensive and will limit the long-term damage, but the outlook remains unpredictable.”

The group said the support offered to customers in financial difficulty means the group’s arrears have so far stayed largely steady.

It has provided 246,000 mortgage payment holidays and promised that no-one will lose their home in the next 12 months because of the impact of coronavirus.

It also extended its pledge not to leave any town or city in the UK where it has a branch until at least 2023.

The UK’s second biggest mortgage lender saw net lending – gross loans less redemptions – nearly halve to £1.6 billion in its first half.

But it said the property market boom since the spring lockdown and stamp duty holiday saw approvals surge, with levels in September 39% higher than the 2019 average.

The group’s net interest margin – a key measure for retail lenders – has stabilised after falling for four years as it slashed savings rates following the cut in the bank base rate to 0.1% in response to the pandemic.

Nationwide has also been trimming costs within the business – down by £92 million to £1.03 billion – and said it would look to drive further efficiencies.