Nationwide reveals profit fall and warns house prices will remain flat for the rest of the year amid ‘subdued’ market
- The lender’s first quarter statutory profits fell by 12% to £281m
- Building society said people were responding to pressure on disposable cash
‘Intense competition’ and a sluggish housing market put a damper on Nationwide’s latest quarterly results.
The building society posted a 12 per cent fall in first quarter profits to £281million, down from £322million at the same point a year ago.
Nationwide said it expects Britain’s housing market to stay ‘relatively subdued’ for the rest of the year, with house prices remaining flat.
Slump: Nationwide suffered a 12% drop in first quarter profits, its latest results reveal
In May, the lender said ‘fierce’ competition in the UK’s mortgage market was weighing on lending growth and profits, and said growth was likely to remain weak for the foreseeable future.
In this latest quarter, while gross mortgage lending increased by 3.7 per cent to £8.4billion, Nationwide said it was seeing a growing number of consumers ‘adapting their behaviours in response to the pressure on disposable income.’
Joe Garner, Nationwide’s chief executive, said: ‘Our outlook is unchanged from the full year, and we expect the economy to grow at a modest pace over the next 12 months.
‘We are observing consumers adapting their behaviours in response to the pressure on disposable income.
‘The housing market looks set to remain relatively subdued with house prices broadly flat in 2018. Against this background, we also expect intense competition to persist in our core markets.’
During the first quarter, 186,900 new accounts were opened with Natwionwide, down from 202,000 a year ago.
Deposit balances grew by £4.2billion thanks to a strong performance from Individual Savings Accounts, including the Loyalty Isa and the no-longer available Single Access Isa, which offered an interest rate of 1.4 per cent.
Predictions: Nationwide said it expects the housing market to remain ‘relatively subdued’
Nationwide said it remained committed to its efficiency programme, which aims to make savings of £300million by 2022, and would provide an update on progress in its interim results in November.
Last week, the Bank of England’s Monetary Policy Committee raised interest rates from 0.5 per cent to 0.75 per cent.
In response, Nationwide said it would raise its tracker mortgage rates and savings rates by 0.25 percentage points from 1 September.