Neil Dennis(Reuters) - Britain’s Nationwide Building Society reported a 4% fall in half-year profit on Friday, a second consecutive period of decline that it attributed to low interest rates and tough competition in the mortgage market.
The lender reported an underlying profit of £588m for the six months to 30 September, down from £615m a year earlier.
Britain’s second-biggest provider of mortgages has been hit in recent years by falling home loans - its main product - and low interest rates, which have squeezed its margins.
Competition intensifies
Nationwide said those pressures were set to continue amid intensifying competition.
“We’re prepared for the possibility that intense competition combined with declining consumer confidence may lead to a moderation in gross lending and market share in the second half of the year,” Chief Executive Joe Garner (above) said.
Rival lender Virgin Money on Thursday also warned its mortgage market share would be lower than previously expected, as low interest rates push banks to offer increasingly attractive offers to home buyers.
Return to core offering
Nationwide has in recent months pared back its business model to focus on its core offering of mortgages and savings and current accounts, selling or closing other business lines like car insurance and inheritance tax planning.
The first-half results followed an 18% fall in profits in the first quarter and a 23% fall in annual profits last year.
Nationwide said its underlying profit, however, increased once a £100m one-off gain from asset sales in the corresponding period a year ago was taken into account.
Picture courtesy of Nationwide website