18 November 2016
- Record prime gross mortgage lending and helped 50% more first time buyers
- Record new current account members – attracted 16% of all current account switchers
- Protected savings rates contributing to annualised benefit for members of £380 million
- No.1 for customer service on high street
- Testing the viability of using technology to bring financial services to communities left without a bank starting with a pilot in Glastonbury
- Third most profitable half year in Society’s history but profit reduced in line with expectations
Over the last six months Nationwide Building Society has continued to help people own their own homes and save for the future. This has resulted in record current account openings and mortgage lending, together with steps taken to protect savers, resulting in strong growth in member deposit balances.
Record prime gross mortgage lending
The Society lent £14.7 billion to help members buy their own home or move up the housing ladder, almost a quarter more than in the same period last year. Nationwide arranged a record 38,600 mortgages for first time buyers, an increase of 50% over last year, and committed to extending home ownership still further, by making £10 billion available to first time buyers this year.
After the base rate cut Nationwide put in place a support package for savers to protect rates on its Help to Buy ISA and Save to Buy account, so that the road to home ownership does not grow even longer. It also encouraged a savings habit by protecting rates on our regular saving accounts.
During the period Nationwide’s members benefited from an average rate on their deposits of 1.07%, 25 basis points higher than the market average, equating to an annualised benefit for our members of £380 million. This has contributed to an additional £4.7 billion being saved with the Society in the last six months, an increase of 80% compared to last year.
Record numbers of new current account members
Nationwide has attracted new members to the Society, notably in current accounts. Thanks to the quality of our current account range, more people than ever before are choosing Nationwide for their everyday banking. The Society opened a record 377,000 current accounts in the first half, a third more than last year and also attracted nearly 16% of all current account switchers, well above the Society’s natural share. Nationwide continues to invest in growing its current account base, and launched its first ever student account during the half year.
Many communities have been left with no access to financial services after years of branch closures. Nationwide believes that there is still a role for the branch on the high street by offering people the choice of managing their money using the latest technology in branch together with the personal service so many value in a digital age. Indeed, the Society’s branches are alive and well as evidenced by the fact that of all new current account openings during the first six months, over half were opened in a branch. Of these, almost one in five current accounts were opened through Nationwide Now, the Society’s high definition video link service – connecting our members in a branch with our colleagues at one of our admin centres, showing how we use the power of technology to connect our members with real people.
Nationwide has decided to test the viability of using technology to bring financial services to communities left without a bank. The Society will pilot this concept with a ‘community contract’ branch in Glastonbury, Somerset, where a consultation suggested that over 1,000 local residents were willing to become a member of Nationwide to support the Society’s investment. This branch will feature the latest technology, including the Nationwide Now service. It is because of our investment in technology that we are able to explore bringing branches back to communities left without a bank in a sustainable way. Should this new branch attract sufficient local support, we will test, learn and consider whether to look at other opportunities to invest in other branches to improve access to financial services.
No.1 for customer service
Nationwide is proud of the fact that it has again delivered the best customer satisfaction ratings on the high street, further increasing our lead over the nearest high street competitor to 8%. In addition, we came first in Forrester’s UK 2016 Customer Experience Index and were awarded the Best Extra Large Call Centre at the Top 50 Companies for Customer Service awards.
A strong Society, making decisions for the benefit of members over the long term
Due to conscious decisions the Society has made to support members in recent years and during this uncertain period, our profits have reduced in line with expectations, but remain healthy at £615 million representing Nationwide’s third most profitable half year. This performance reflects further margin pressure due to the prevailing low interest rate environment and the conscious decisions we have taken in recent years to support our members. The Society’s capital base remains strong at 23.3% and Nationwide has a leverage ratio of 4%.
Joe Garner, Nationwide’s Chief Executive, said: “Despite recent economic uncertainty Nationwide Building Society has continued to serve the needs of its members just as we have for generations. This has resulted in record current account openings and mortgage lending and a strong growth in member deposit balances, driven by the steps we took to protect savers from reducing interest rates.
“As a building society we continue to focus on the needs of our members, which is why we are testing the viability of whether we can use technology to bring financial services in people in communities left without a bank starting with a pilot in Glastonbury in Somerset.”