Nationwide in 69 per cent profit fall on protection fees

City A.M. Reporter
NATIONWIDE, &nbsp;Britain&rsquo;s largest building society, reported a 69 per cent drop in full-year pre-tax profits yesterday, blaming the decline on the costs of the government&rsquo;s deposit protection scheme for savers.<br /><br />The mortgage provider and lender offered little sign of optimism in its outlook, warning of further loan loss provisions to come.The group said it was braced for a rise in bad debt provisions, claiming low interest rates had depressed margins and said it expects a significantly reduced level of underlying profit, seen in the second half of the last financial year, to continue.<br /><br />&ldquo;Market conditions will remain challenging throughout 2009 and beyond,&rdquo; chief executive Graham Beale said.<br /><br />Analysts said the lender&rsquo;s 12 per cent drop in margins in the second half and bleak outlook point to a worrying trend for the sector as a whole.<br /><br />&ldquo;That Nationwide can be flagging a potential decline in profits towards zero &ndash; or even losses &ndash; in the next 12 months is clearly bad news for the UK domestic banks,&rdquo; said analysts at Credit Suisse.<br /><br />The lender&rsquo;s statutory pre-tax profit, which includes an exceptional charge of &pound;241m to cover its contributions to Britain&rsquo;s depositor protection scheme, came in at &pound;212m, 69 per cent lower than last year.<br /><br />The mutual said the government levies accounted for more than half of the fall in its reported profit<br /><br />Stripping out exceptionals, the society&rsquo;s underlying profit before tax fell 49.7 per cent to &pound;393m, it said.