UPDATE 1-British lender Nationwide abandons some targets as profit slumps

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* Lender abandons some member benefit targets

* Books 101 mln pound charge for expected credit losses

* Will focus on capital and liquidity (Adds detail)

By Lawrence White and Iain Withers

LONDON, May 29 (Reuters) – Britain’s Nationwide Building Society’s annual profit nearly halved, it said on Friday as it warned of rising loan losses due to the coronavirus pandemic and abandoned some of its member benefit targets.

The bellwether mortgage lender booked a 101 million pound ($124.6 million) hit from expected credit losses and will focus for now on maintaining capital reserves after profit for the year to April 4 fell 44% to 466 million pounds.

Nationwide said profit had been under pressure before the pandemic, owing to margin erosion from tough competition in the mortgage market, but the outbreak had caused it to ditch some annual targets.

Among these is its goal of delivering more than 400 million pounds in financial benefits to customers through better pricing on the likes of savings deposits, adding that paying significantly better rates to savers has become unsustainable after the central bank cut the base rate to 0.1%.

“In the last 10 years we have built our capital strength significantly and we will use our financial strength to support our members through the difficult times ahead,” said Chief Executive Joe Garner.

Unlike the big shareholder-owned banks that are its main rivals, Nationwide – as a member-owned society – is not under pressure to deliver ever greater returns to shareholders.

Nationwide reported a core capital buffer of 31.9%, down slightly from 32.2% the previous year but still ahead of most major rivals. ($1 = 0.8106 pounds)

Reporting by Lawrence White and Iain Withers
Editing by David Goodman

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