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Nationwide Building Society on Friday posted a jump in yearly profit, despite a growing impairment charge of £126 million.
The Swindon, England-based mortgage lender said its pretax profit for the financial year that ended April 4 rose 39% to £2.23 billion from £1.60 billion at the same point last year. Net interest income increased by 26% to £4.50 billion from £3.56 billion.
Net interest margin improved to 1.57% up from 1.26% a year before, whilst gross mortgage lending reduced to £33.6 billion from £36.5 billion.
‘Increases in the bank rate have led to an increase in net interest income, reflecting the timing and the level of pass through of interest rate changes to saving products, partially offset by a decline in mortgage net interest income. Member financial benefit has increased, as Nationwide has passed a greater proportion of interest rate rises to savers than the market average,’ the bank explained.
The bank posted a net impairment charge for the year of £126 million, a swing from a previous net impairment release of £26 million in the same period last year. Nationwide said this ‘reflected a decrease in provisions during a year where the economic outlook had improved’.
Looking ahead, Nationwide expects continued pressure on household budgets, with the level of government energy support reducing and inflation forecasted to return to the Bank of England’s 2% target in the medium term, not short. The bank’s base case economic scenario assumes a 4.5% fall in house prices in 2023.
Chief Executive Debbie Crosbie said: ‘Our strategy is to increase value, offer simply brilliant service, be good for society and to become simple and more efficient. This will ensure Nationwide’s future strength and our ability to support customers and wider society today and for the long term.’
Nationwide Building Society reported a common equity tier 1 ratio of 26.5% versus 24.1% year-on-year, whilst its leverage ratio stood up 6.0%, up from 5.4%.
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