Nationwide Building Society – Interim Results
Introduction
Unless otherwise stated, the income statement analysis compares the period from 5 April 2019 to 30 September 2019 to the corresponding six months of 2018 and balance sheet analysis compares the position at 30 September 2019 to the position at 4 April 2019.
Underlying profit
Profit before tax shown on a statutory and underlying basis is set out on page 10. Statutory profit before tax of £309 million has been adjusted to derive an underlying profit before tax of £307 million. The purpose of this measure is to reflect management's view of the Group's underlying performance and to assist with like for like comparisons of performance across periods. Underlying profit is not designed to measure sustainable levels of profitability as that potentially requires exclusion of non-recurring items even though they are closely related to (or even a direct consequence of) the Group's core business activities. For more information see the Financial review on page 10.
Forward looking statements
Certain statements in this document are forward looking with respect to plans, goals and expectations relating to the future financial position, business performance and results of Nationwide. Although Nationwide believes that the expectations reflected in these forward looking statements are reasonable, Nationwide can give no assurance that these expectations will prove to be an accurate reflection of actual results. By their nature, all forward looking statements involve risk and uncertainty because they relate to future events and circumstances that are beyond the control of Nationwide including, amongst other things, UK domestic and global economic and business conditions, market-related risks such as fluctuation in interest rates and exchange rates, inflation/deflation, the impact of competition, changes in customer preferences, risks concerning borrower credit quality, delays in implementing proposals, the timing, impact and other uncertainties of future acquisitions or other combinations within relevant industries, the policies and actions of regulatory authorities, the impact of tax or other legislation and other regulations in the jurisdictions in which Nationwide operates. As a result, Nationwide's actual future financial condition, business performance and results may differ materially from the plans, goals and expectations expressed or implied in these forward looking statements. Due to such risks and uncertainties Nationwide cautions readers not to place undue reliance on such forward looking statements.
Nationwide undertakes no obligation to update any forward looking statements whether as a result of new information, future events or otherwise.
This document does not constitute or form part of an offer of securities for sale in the United States. Securities may not be offered or sold in the United States absent registration or an exemption from registration. Any public offering to be made in the United States will be made by means of a prospectus that may be obtained from Nationwide and will contain detailed information about Nationwide and management as well as financial statements.
Nationwide Building Society puts members first as it prioritises investment in service, value and technology over short-term profit
Strong capital position underpins decisions to reward members and invest for the future
- Member financial benefit of £365m from better interest rates, fees and incentives than the market average (H1 2018/19: £330m);
- Net interest income of £1,385m (H1 2018/19: £1,438m) and net interest margin of 1.12% (H1 2018/19: 1.23%) in line with expectations;
- Costs of £1,125m (H1 2018/19: £1,100m) as we continue to invest for the future;
- Underlying profit of £307m (H1 2018/19: £460m) and statutory profit of £309m (H1 2018/19: £516m) reflect lower income and increased investment costs, together with additional PPI charges (as announced in September);
- Capital ratios remain strong with UK leverage ratio of 4.6% (4 April 2019: 4.9%), and CET1 ratio of 31.5% (4 April 2019: 32.2%).
Growth in mortgages, savings and current accounts, with greater focus on deepening member relationships
- Our stock of mortgage balances continues to grow, with gross and net mortgage lending of £16.3bn (H1 2018/19: £17.3bn) and £3.0bn (H1 2018/19: £3.6bn) respectively, as we supported 33,500 first time buyers (H1 2018/19: 40,500);
- Deposit balances grew by £2.5bn (H1 2018/19: £5.1bn) as we continued to offer competitive rates;
- Opened 389,000 current accounts (H1 2018/19: 399,000), growing market share of main accounts to 8.1%1 (March 2019: 8.0%) as 18.7% of switchers2 chose Nationwide (H1 2018/19: 21.5%).
Delivering leading service to record number of members
- Record membership, with committed members3 increasing to 3.5m (31 March 2019: 3.4m);
- No. 1 for customer satisfaction among our peer group with a lead of 5.8%pts (March 2019: 4.8%pts)4, and 8th in all-sector UK Customer Satisfaction Index5 (previously joint 5th);
- Named Which? Best Banking brand three years running, Which? Best Mortgage Provider, and UK's most trusted financial brand6;
- Received gold customer experience ribbons from Fairer Finance in the current accounts, credit cards, mortgages, personal loans, savings accounts and home insurance categories.
Continuing to invest to meet members' needs today and in the future
- Transformation of IT infrastructure underway to simplify and enhance IT estate and increase capacity as our membership continues to grow;
- Upgraded 150 branches since 2017, including 28 in the last six months, combining the best of digital service with a human touch;
- Secured premises for new digital innovation hubs in London and Swindon;
- First high street provider to offer a comprehensive range of later life lending products.
- On track to serve more of our members' needs with the launch of Nationwide for Business in 2020.