Building society Nationwide reported a resilient performance in the first half year with profits stable, despite a £139m impairment charge.
The lender reported a 17 per cent rise in pretax profit from £309m to £361m, despite a £139m provision for loans that may not be repaid due to the pandemic.
Net lending for the six months to 30 September dropped to £1.6bn, nearly half of the previous year’s £3bn, but was propped up by strong demand for buy-to-let mortgages.
Total gross mortgage lending for the period was down from £16.3bn to £12.7bn but Nationwide said it was a “strong result in view of the disruption”.
Activity in the housing market fell sharply in lockdown but recovered strongly with mortgage approvals in September tracking 39 per cent higher than the previous year. Annual house price growth increased to 5.8 per cent last month, its highest level since January 2015.
The results capture the initial lockdown and the reopening of the economy over the summer but does not reflect the recent restrictions.
Nationwide opened 256,000 new current accounts, lower than the 391,000 opened in the same period last year, and maintained its market share of 10.1 per cent for current accounts.
“It is pleasing to see the benefits of our conservative approach feed through into the results for the half year,” said chief financial officer Chris Rhodes. “Our margin has stabilised, costs have reduced and profit is stable compared to the same period last year, despite a rise in impairment charges associated with the pandemic and the current uncertain economic outlook.”
The building society remained cautious in its outlook for the year given the unpredictability of the economic recovery. “While there are many uncertainties ahead, Nationwide faces into them from a position of considerable strength,” it said in a statement.