Nationwide bounces back as market share surges

Nationwide, Britain's fifth-largest mortgage lender, has continued its strong recoveryby seizing 16 per cent of the market for new home loans in the six months to the beginning of October.

The slice was double Nationwide's 8 per cent share of the existing market, and signals a strong recovery for Britain's biggest building society.

Nationwide was on shaky ground in 2001 after it scrapped short-term deals aimed at drawing in new customers. The move, which was followed by the resignation of the then chief executive Brian Davis, resulted in Nationwide sinking to almost no growth in new lending. The building society has since resumed the widely-practised policy among lenders of offering very attractive deals to lure new customers.

Nationwide also yesterday demonstrated the continued buoyancy of the housing market, reporting a 22 per cent rise in first-half profit to £188.4m.

Philip Williamson, who has been its chief executive for nearly two years, said Nationwide had held on to more customers than its competitors, with redemptions at 6.2 per cent, down from 7.9 per cent last year. Mr Williamson predicted the heady ascent of house prices would slow next year to about 9 per cent annual growth from its current level of 16 per cent.

Bad debt provisions rose to £30m from £20m last year. Nationwide said the increase reflected the growth in its overall mortgage book. The society was not worried that the rise in interest rates and consumer debt meant that its bad debts were likely to rise.

Nationwide also said it had succeeded in attracting re-mortgage business, gaining an estimated 9.5 per cent of the market from 4.2 per cent last year.

The society has fended off several attempts by some members to convert it to a public company. Mr Williamson said: "Our performance proves that a well-run mutual can put members first by pricing products fairly and still generate a healthy level of profit."