Nationwide, Britain’s biggest building society, grabbed its biggest ever share of the mortgage market last year and saw its profits jump strongly as it continued to attract customers across from discredited high street banks.
But at the same time the mutual was hit by a huge increase in bad debt provisions for its loans on commercial properties. These more than doubled from £247 million to £493 million — a level which represents just over a quarter of its commercial property loanbook.
Chief executive Graham Beale said: “Most of these loans relate to business done before the financial crisis. They are geographically diverse across the country and cover all sectors, including retail, warehouses, offices and leisure.
“There has been weak demand from tenants and falling property values, so we are helping our borrowers stay in business and also protecting our members’ interests.”
The retail business’s growth more than countered this and headline profits rose 56% to £475 million.
Nationwide’s gross lending rose by 17% to £21.5 billion, taking its market share to 15.1%. Beale said first time buyer lending had grown particularly strongly.
New personal current accounts helped to attract 365,000 new customers and 123,000 switched their main account across to the society. Beale said: “With low interest rates still required to support economic growth, this environment, combined with relative stability in unemployment, supports mortgage affordability but is unfavourable for savers.”Reuse content