Nationwide to return £340m to members after record results

Nationwide Building Society said on Friday that it will return £340m to members as it reported record full-year profits.

In the year to 4 April, underlying pre-tax profit rose to £2.2bn from £1.6bn a year earlier, with total underlying income increasing to £4.7bn from £3.9bn amid rising interest rates.

Nationwide said the strong results have enabled it to launch the Nationwide Fairer Share Payment, which will see the building society return £340m directly to eligible members. They will receive a £100 payment into their current accounts in June.

Credit impairment charges rose to £126m from £27m but Nationwide said the credit quality of its lending portfolios remains strong with low levels of arrears. The net interest margin improved to 1.57% from 1.26% a year earlier.

Despite the solid results, Nationwide warned that the economic outlook remains "highly uncertain", with the cost-of-living crisis and higher interest rates for borrowers putting further pressure on household finances and weighing on consumer confidence.

"This has led to reduced mortgage market activity and lower house prices which are expected to remain subdued in the second half of 2023," it said.

Victoria Scholar, head of investment at Interactive Investor, said: "The building society has benefitted from the rising rate environment allowing it to earn more on lending products such as mortgages, which have become significantly more expensive as the Bank of England desperately tries to tame inflation.

"However, the macroeconomic headwinds of sluggish growth and rampant inflation raises the risk of loans turning sour, forcing Nationwide to up its provisions in preparation."