Nationwide Building Society - Interim Results 2018

Nationwide reports strong trading and announces intention to launch current account for small businesses

Intends to launch a business banking current account, bringing Nationwide's service and value to small businesses

Helped 1 in 5 first time buyers; grew member deposits by £5.1bn; more people chose Nationwide for current accounts than any other high street brand1

Returned £330m to members in member financial benefit

Profitability in line with expectations as Society invests for the future

·      Underlying profit of £460m (H1 2017/18: £589m) and statutory profit of £516m (H1 2017/18: £628m), in line with expectations

·      Profits are after a charge of £135m from asset write-offs and incremental technology spend as Society increases investment to meet members' future needs

·      Costs flat, excluding asset write-offs and additional technology investment; on track for £100m sustainable saves in 2018/19

·      UK leverage ratio of 5.0% (4 April 2018: 4.9%); CET1 ratio at 31.7% (4 April 2018: 30.5%)


Investing and innovating for members

·      Over the next five years, Society to invest an additional £1.3bn in technology (announced in September), taking total investment in the Society to £4.1bn over this period

·      Intention to launch business banking current account, bringing leading service, scale and mutuality to small businesses

·      Remain committed to £350m in ongoing investment programme in branch network

Rewarded members with £330m in member financial benefit

·      Members benefited from better rates, fees and incentives including an additional £250m (H1 2017/18: £180m) in deposit interest compared to the market average

·      Members chose to do more with us: engaged members increased to 9.1m (March 2018: 8.9m) and committed members to 3.3m (March 2018: 3.2m)2

No 1 for service and trust

·      Number one for customer satisfaction among our high street peer group with a lead of 4.2% (March 2018: 4.6%)3

·      Joint fifth in the Institute of Customer Service's UK Customer Satisfaction Index of all sectors, up from joint seventh

·      The UK's most trusted financial brand4

Provided members with average deposit rates more than 50% higher than the market average5

·      Grew member deposits6 by £5.1bn (H1 2017/18: £1.8bn)

·      595,000 people opened the new Single Access and Loyalty ISAs (H1 2017/18: 535,000); Nationwide attracted 66% market share of the growth in ISA deposits

·      Market share of stock of deposits maintained at over 10%

Helped more people into a home, including a record 40,500 first time buyers

·      Total gross mortgage lending up to £17.3bn (H1 2017/18: £16.7bn)

·      Maintained share of stock of lending in a competitive mortgage market at 13.0% (March 2018: 12.9%)

·      1 in 5 first time buyers chose a Nationwide mortgage - a record 40,500 (H1 2017/18: 39,500)

More people opened current accounts with the Society than any other high street brand1

·      399,000 new current accounts opened by Nationwide (H1 2017/18: 427,000), maintaining market share of openings1

·      1 in 5 of all switchers moved to Nationwide; market share of switchers increased to 21.5% (H1 2017/18: 20.2%)7

Joe Garner, Chief Executive, Nationwide Building Society, said:

"Nationwide Building Society exists to serve our members, communities and society. In the last six months, we have continued to grow strongly, our members have continued to benefit from competitive rates, attractive products and leading service, and we have improved our already robust financial position. The strength of our business means we are well placed to invest confidently in the future of the Society, and we have committed to invest an additional £1.3 billion over the next five years to transform our technology estate and capabilities. This will take our total investment over the next five years to £4.1 billion and will ensure the Society makes the most of the opportunities ahead. We will develop new propositions, further enhance our service, simplify our operations and build new skills for the future.

"This conscious decision to increase our investment is underpinned by the continued strength of our performance over the last six months. We continue to lead our high street peer group for customer satisfaction by a significant margin1. We protected savers and rewarded loyal members, delivering £330 million in member financial benefit through better rates, fees and incentives than the market average over the half year. The special rate ISA, available exclusively to our loyal members, contributed to a £5.1 billion rise in deposits. We continued to support first time buyers, helping a record 40,500 into a home of their own - 1 in 5 of all first time homeowners. And more people are choosing Nationwide for their everyday finances, with almost 400,000 current accounts opened with us so far this year.

"Our success in the personal current account market, where we have grown accounts by 70% in the last five years, has given us the confidence to accelerate our entry into the business banking market. The funding available from the Banking Competition Remedies remains important to us as it will allow us to bring our proposition to market faster and with greater impact. 50,000 members a year ask us to provide business banking, and we believe we can offer a compelling mutual alternative to Britain's currently underserved 5.6 million small businesses. Nationwide is here for the long term and we believe we can make a lasting difference in this market, as we have in the personal current account market, thanks to the combination of leading service and good value we can offer. This is the logical next step in bringing mutuality to more people.

"Our first half profits were lower than last year because we have chosen to increase our investment in the future of our Society. As a mutual, we do not judge our success by profit growth alone, but by how we manage our profits to serve our members' interests. We do that by maintaining the high-quality service and excellent value products our members prize today, while also investing in building new propositions, services, and skills, so we can meet members' future needs."

Financial summary



Half year to

30 September 2018

Half year to

30 September 2017

Financial performance





Total underlying income





Underlying profit before tax (note i)





Statutory profit before tax





Mortgage lending





Group residential - gross/market share (note ii)





Group residential - net/market share (note ii)















Average loan to value of new business (by value)





Deposit balances





Member deposits balance movement/market share (notes ii and iii)





Key ratios





Cost income ratio - underlying basis (note i)





Cost income ratio - statutory basis





Net interest margin






Looking ahead, the economic outlook remains mixed. While the UK economy has continued to grow, with employment at or close to historic highs and wages rising in real terms, obvious challenges remain. Most notably uncertainties, including those surrounding Brexit, appear to be holding back investment and dampening activity in the housing market. Despite this, we expect the economy to grow in the quarters ahead - more slowly at first, and at a faster pace as the level of uncertainty eases. We expect the housing market to mirror trends in the wider economy. Against this backdrop, the Society is strong and secure, with a growing membership and business, and is well placed to support our members with the products and services they need to manage their financial lives.