Profits fell in Nationwide’s third quarter as the building society was hit by a £167m write-off charge as well as an ongoing technology investment, it revealed today, warning profit pressure will remain in the fourth quarter.
Pre-tax profits dropped a staggering 20 per cent year on year to £703m for the last three months of 2018, compared to the same period the year before, when profit stood at £886m.
Read more: UK house price growth falls to six-year low
Underlying profit slipped to just £691m from £880m in 2017.
The co-operative blamed a £167m asset write-off as well as its drive to replace its IT stack, but said the results were in line with guidance issued last September.
However, net mortgage lending grew 36 per cent to £6.1bn between April and December 2018, despite Nationwide’s own dour outlook for the UK housing market, as it helped 59,400 first-time buyers buy their first home.
Member deposits also grew by £5.9bn over the nine-month period as Nationwide upped its market share by 0.1 per cent to 10.1 per cent, crediting the increase to the popularity of its Loyalty ISAs and Single Access products.
Meanwhile one in five current account switchers moved to Nationwide, according to an Ipsos Mori survey, as the bank grew its number of current accounts five per cent to 7.7m.
What Nationwide said
Chief executive Joe Garner said: “In September we took the conscious decision to increase significantly our investment in the society in the full knowledge that it would impact profitability in the short-to medium-term but would be of long-term benefit to our members.
“This investment is to ensure we can continue to meet our members' changing needs in an increasingly digital future. At the same time, consistent with member feedback, we remain committed to and are investing in our presence on the high street.
“Looking ahead to the fourth quarter, as consumers continue to benefit from considerable choice, we intend to remain competitive and thus expect that lending margins will continue to moderate. We are confident that the Society's financial strength means we can continue to support members, as we have always done."
More to follow.