Nationwide profits hit by low interest rate environment

Nationwide branch Exeter Image copyright Nationwide

Nationwide has reported a drop in half-year profits as low interest rates squeezed profit margins.

Profits at the UK's biggest building society fell to £696m for the six months to 30 September, down from £802m a year earlier.

But it said net mortgage lending was its "best ever", rising by 46% to £6bn.

The mutual organisation also said its current account had attracted record numbers, with 377,000 people opening an account in the period, a jump of 36%.

Banks and building societies find it harder to make money in times of low interest rates as the difference between rates paid to savers and paid by borrowers narrows, giving less room for institutions to take a profit.

Brexit panel

Nationwide chief executive Joe Garner said: "We have taken the conscious decision to stand by our members, continuing to help them by reducing variable mortgage rates and offering long-term value to savers, even in the current low interest rate environment.

"As expected these conscious decisions and those taken in recent years have had a knock-on impact on our profits."

However, overall the society said it had achieved "strong trading and a good financial performance over the first half of the year".

The Nationwide said that the UK's vote to leave the EU was creating uncertainty, but it had set up a Brexit Consumer Support Panel, which it said would bring together consumer industry organisations to try to address the challenges facing consumers.

The panel will provide insights to the government into consumer attitudes and behaviours in relation to Brexit and promote consumer interests.

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