Nationwide blames profit slump on investment in new technology

Building society said it maintained share of mortgage market in first half

The building society said it will invest £4.1bn in tech over the next five years (Getty Images)

Nationwide profits dropped by 17 per cent in the first half of the year due to asset write-offs and investment in technology.

In the six months to 30 September, profits fell to £516m from £628m, while underlying profit tumbled to £460m from £589m.

Chief executive Joe Garner said on Thursday: "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."

The building society spent £1.3bn on technology this year in a bid to better compete with rivals.

Mr Garner said this took the total investment over the next five years to £4.1bn, and “will ensure the Society makes the most of the opportunities ahead”.

Meanwhile, total gross mortgage lending rose to £17.3bn from £16.7bn, and the group said it had maintained a 13 per cent share of the “competitive” mortgage market.

Mark Rennison, Nationwide’s chief financial officer, said: “These results show that Nationwide is built to last and continues to provide a secure home for members' money.

“As a building society we do not aim to maximise profit and our decision to increase investment was in the full knowledge that it would impact on our profitability.

"If we exclude the charge we've recognised for asset write-offs and incremental technology spend, profits are in line with last year and we have held costs flat while servicing rising business volumes.”

He added: “As a mutual we take decisions on rates that are in the long-term interests of our membership, rather than pursuing short-term gain. We anticipate this, and the competitive market, will lead to further pressure on margins in the second half of the year.

“Despite the uncertain political and economic environment, our financial strength gives us confidence that we can continue to be there for our members in the months and years ahead in the same way that we have always been.”