Nationwide has increased its share of the UK mortgage market to an unprecedented level. It has been aided by government programmes to support homebuyers, including the Funding for Lending Scheme offered by the Bank of England.
The largest building society in the UK by customer numbers had a 17 per cent increase in gross mortgage lending to £21.5 billion in the year ended April 4. It funded 15.1 percent of all UK mortgages, up from 13 percent in 2012.
Nationwide also increased its provisions for bad commercial property loans to £493 million from £247 million one year ago. The reason for the increase given was because the sector “continued to pose challenges to our short-term profitability.”
The building society’s chief executive, Graham Beale, was cautious about the short term prospects of the UK’s property market. In a recent statement, he spoke of weak demand and falling values before saying that any recovery would be several years away.
He said, “The weak economy has continued to undermine the performance of our commercial real estate portfolio, which has been impacted by weak tenant demand …and a resumption of declines in property values.
“Our portfolios have been quite prudent, this is good honest lending. But it is a fact that the economy has had a detrimental impact on asset values.”
Despite taking a £165 million hedging loss, Nationwide reported a very solid 56 per cent year-on-year increase in underlying profit to £475 million for the year ending in March.
When the hedging loss and other factors are taken into consideration, the pre-tax profit increased by three per cent to £210 million. The total income was 18 per cent higher, at £2.5 billion.
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