Profits leap at building society

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NATIONWIDE, the building society, yesterday reported a 20.4 per cent jump in profits in the last six months in spite of the slowdown in the housing market.

Pre-tax profits leapt from pounds 176.6m to pounds 212.7m as new customers joined the society during its high-profile campaign to stay mutual. In a July poll of its members, Nationwide narrowly voted to stay mutual.

Publicity surrounding the campaign led to an upsurge in savings business, where balances grew by 8.6 per cent over the half year. Reserves grew to pounds 2.8bn.

However, Nationwide's share of the mortgage market slipped as some borrowers redeemed their loans following the vote in July. The society's share of new loans fell from 11.9 to 11.6 per cent.

Brian Davis, chief executive, said: "I'm surprised in some ways we have managed to hold it up there, given that the share of existing mortgages is much less - around 8 per cent."

Mr Davis said costs had been sharply reduced over the last year but further cuts were needed. He also warned of a difficult year in the mortgage market during 1999.

"We are all preparing ourselves for a bit of a downturn but we don't want to talk ourselves into it. Our projections are still for interest rates to be around 6 per cent-ish at the end of next year."