Nationwide sees dip in mortgage lending but looks for "strong" final quarter

Jasper Jolly
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Nationwide Building Society Announce Rate Cap
The UK's biggest building society saw lending dip (Source: Getty)

Nationwide today said it expects a stronger end to its financial year in spite of a dip in mortgage lending.

The figures

Profits fell from £946m to £886m, although those figures were distorted by the £100m sale of a stake in Visa Europe last year, as well as a £26m one-off gain from the disposal of the stake in VocaLink this year. Underlying profits, stripping out the one-off costs, rose by 3.8 per cent to £883m.

Mortgage lending fell to £24.1bn in its third-quarter, down from £26.2bn in the same period last year.

The bank's capital tier one equity ratio, a key measure of the bank's capital strength, rose significantly to 30.5 per cent, up from 25.4 per cent less than a year ago.

Nationwide also gained more new current account customers than any other bank, with openings up eight per cent in the quarter to 617,000.

Why it's interesting

As Britain's biggest building society, Nationwide is a key player in a housing market which has showed signs recently of a slowdown, as house prices have stalled.

At its half-year results in November Nationwide warned of the likely dip in its mortgage lending amid intense competition. The building society said it will "prioritise quality over volumes" in its lending rather than chasing market share, which could potentially leave it exposed if economic conditions turn.

However, the Bank of England's rate rise path should benefit the lender. Continued low interest rates will "maintain pressure on margins", it said today, but the Bank's steeper path of rate hikes should give a boost to interest margins.

What Nationwide said

Nationwide chief executive Joe Garner said: “The Society continued to trade strongly in the period."

"As we anticipated, a subdued buy-to-let mortgage market, plus sustained competition, slowed the pace of growth in our mortgage book. With third quarter mortgage reservations significantly stronger than for the same period last year, we expect a strong final quarter for our gross lending."

“Looking ahead, we expect the economy to continue to grow but only modestly," he said. "Modest economic growth is also likely to hold back the housing market and house price growth. Overall, we expect house prices to be broadly flat in 2018 with perhaps a marginal gain of around one per cent."

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