November 22, 2018 / 7:22 AM / 6 months ago

Nationwide profit falls 17 percent on technology investment

LONDON (Reuters) - Nationwide Building Society (POB_p.L), one of Britain’s three biggest mortgage providers, reported a 17 percent drop in first-half profit on Wednesday as it booked a charge for asset write-offs and technology investments.

FILE PHOTO: A woman passes a branch of the Nationwide Building Society in London May 27, 2009. REUTERS/Toby Melville/File Photo

The lender said it took a charge of 135 million pounds for the six-month period, as it invests in technology to improve its services amid rising competition for savings deposits from traditional incumbent players and new upstart digital banks.

Nationwide, a bellwether for the British home loan market with its 13 percent mortgage share, said its net interest margin fell to 1.27 percent in April-September, from 1.34 percent in the same period a year ago, amid intense competition among lenders.

Banks in Britain have in recent months reported tightening margins, as new players entering the market and contracting demand for home loans have squeezed the rates lenders can charge.

Nationwide said its statutory profit was 516 million pounds in the first half of its financial year, down from 628 million in the same period a year ago but in line with expectations.

Unlike rival listed banks such as Lloyds and Barclays which have a goal of delivering ever higher profits to their shareholders, Nationwide operates as a society owned by its customers and has said it will be comfortable keeping annual profits at between 0.9 billion and 1.3 billion pounds per year.

The lender said fears about the impact of Britain’s exit from the European Union have held back investment.

“Consumer confidence and activity in the housing market are more subdued than what you’d expect,” Nationwide Chief Economist Robert Gardner said.

Nationwide said it will press ahead with plans to launch a business current account regardless of whether it wins funding for the scheme from a fund set up by Royal Bank of Scotland to fulfil the conditions of its 2008 crisis-era bailout.

That represented a change in Nationwide’s previous stance on the topic when it said it would only launch the business account if it succeeds in its application for the funding.

Editing by Silvia Aloisi and Susan Fenton

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