Nationwide gets home loans boost

Graham Beale

Graham Beale

0
Have your say

Nationwide, the UK’s biggest building society, more than doubled underlying profits to £539m in the nine months to the end of December and said it was ahead of target in shoring up its balance sheet.

Gross mortgage lending rose by 34 per cent to £21.6bn, savings balances rose by £5.7bn and more than 316,000 new current accounts were opened, up 20 per cent on the same period a year earlier.

Chief executive Graham Beale said some of the earnings would be put towards beefing up its capital ratio.

The retained profits will add to the £550m raised to boost its balance sheet last year after creating a new type of special share.

Nationwide has been ordered to bolster its finances by the Prudential Regulation Authority (PRA), as a buffer against future financial crises.

Mr Beale said: “This trading performance translates into a strong set of financial results with underlying profit up 105 per cent to £539m.

“Retained earnings, together with the successful issuance of capital in December 2013, have further strengthened our capital ratios and we are significantly ahead of the plans agreed with the PRA last year.”

The chief executive said the results continued trends seen in previous half-year results, with the lender continuing to play a leading role in the housing market.

Nationwide’s market share of gross mortgage lending is 15 per cent and it said it continued to account for a fifth of all first-time buyer home loans.

The figures showed that it raced to take advantage of a flagship Bank of England scheme that rewards lenders by giving them access to cheap finance by drawing down £4bn in the month before it closed.

The Funding for Lending scheme (FLS) was launched in 2012 to stimulate borrowing by households and businesses by giving incentives to banks and building societies.

But a marked improvement in the housing market meant that the home loan element was scrapped so that it could be re-focused on business, with the last funds available to be drawn down in January.

Nationwide revealed that it had drawn down £4bn in that month alone, nearly half of the total £8.5bn funding it had taken advantage of since the scheme launched in June 2012. It was double the £2bn drawn down in the three months to December.

Yorkshire, Leeds and Skipton building societies are due to report next week.

Travel alert: East Coast Main Line blocked after trespassing incident