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Nationwide Building Society on Friday posted a jump in interim profit, despite facing a £108 million impairment charge.
The Swindon, England-based mortgage lender said pretax profit in the six months to September 30 rose 14% to £969m from £853m a year earlier. Pretax profit benefited from an increase in net interest income, which climbed to £2.06 billion from £1.71 billion.
Net interest margin improved to 1.48% from 1.24% a year before. Gross mortgage lending rose to £19.7 billion from £18.2 billion.
‘Increases in the bank base rate during the period have led to an increase in net interest income, reflecting the timing and the level of pass through of interest rate changes to savings products, partially offset by a decline in mortgage net interest income,’ Nationwide explained.
However, during the six-month period, the bank posted a net impairment charge of £108 million, swung from a net impairment release of £34 million in the same period last year. It noted that this was primarily due to a deterioration in the wider economic outlook.
Looking ahead, Nationwide expects continued uncertainty within the UK economy, with interest rates continuing to rise in an effort to curb rising inflation. There is also likely to be more pressure on household budgets, causing a deterioration in credit performance, it added.
Chief Executive Debbie Crosbie said: ‘Nationwide is not immune to the current economic challenges and it's important to maintain financial strength. Our strategy is focused on growing the membership base, increasing value to members, and becoming simpler and more efficient in the way we operate. This will ensure the Society's future strength and ability to continue to support members and wider society.’
Nationwide Building Society reported a common equity tier 1 ratio of 25.5% versus 24.1% year-on-year, while its leverage ratio stood at 5.8%, up from 5.4%.
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