Nationwide Building Society full year results: long term focus drives strong performance

24 May 2016

  • Highest lending since financial crisis helps more people into a home of their own
  • Strong savings performance: rewarding loyalty for savings members
  • A net gainer in current account switching: attracting high levels of new customers

Nationwide Building Society today announces its full year results for the financial year 2015/2016, showing strong underlying profitability driven by strong mortgage lending, savings inflows and further growth in its current account market share with over half a million new current account openings.

Key highlights:

  • Gross mortgage lending up 20% to £32.6 billion (2015: £27.1 billion)
  • Net mortgage lending up 28% to £9.1 billion (2015: £7.1 billion)
  • Growth in member deposit balances of £6.3 billion (2015: £1.9 billion)
  • Expanded current account base with 525,000 new accounts - up 12% on 2015
  • Net gainer in current account switching - up 38%
  • Ranked number one for customer service satisfaction amongst its high street peer group again this year – extending lead to 7.7%
  • Underlying profit up 9% at £1.337 billion (2015: £1.227 billion)
  • Statutory profit up 23% at £1.279 billion (2015: £1.044 billion)
  • CET1 capital ratio up to 23.2% (2015: 19.8%)
  • Leverage ratio improved to 4.2% (2015: 4.1%)

Nationwide chairman David Roberts said: “These results are a testament to always putting our members first. I would like to thank Graham Beale for his huge contribution to the Society which has left the business in great shape, prospering as a modern mutual and I wish him well for the future. I am delighted to welcome Joe Garner as Nationwide’s new Chief Executive. Joe stood out as someone with a deep understanding of the sector, who has championed customer interest throughout his career, and who will set the strategic direction for the Society and our people.”

Nationwide chief executive Joe Garner said: “Nationwide has demonstrated that outstanding customer service is the most sustainable path to excellent business performance. It's a credit to the management and people of the Society that they have consistently understood this and organised Nationwide around this principle. As a result, last year we lent more money to help people into a home of their own than since before the financial crisis in 2007. More people are also choosing to manage their money with Nationwide, with over half a million new current accounts opened in the year. And our loyalty accounts and regular savings offering has led to an increase in member deposit balances of £6.3 billion.

“It is my privilege to have been asked to lead an organisation which has consistently demonstrated that it is possible to be successful by doing the right thing. Our mutual status creates an ownership model that allows us to take a long term view and make decisions in the best interests of our members. This, and our talented people, is Nationwide’s strength and our opportunity."

Helping more members buy their own home

Last year Nationwide continued to support people to purchase a home of their own, something which helped strengthen its position as the UK’s second largest mortgage lender.

  • Gross mortgage advances reached £32.6 billion, a 13.7% market share
  • Net mortgage lending of £9.1 billion, a 21.4% market share
  • Helped 57,200 first time buyers into a home of their own, one in six of all such cases in the UK
  • During the four years to 4 April 2016 accounted for over one third of net lending in the market
  • In recent weeks the Society led the way in increasing the maximum limit for mortgages from 75 to 85, giving Nationwide the highest age threshold of any high street lender
  • Nationwide was also one of the first lenders to increase rental cover requirements and reduce the maximum loan to value for new buy to let loans

Rewarding loyal savers

Nationwide’s loyalty accounts and regular savings offering have led to an increase in member deposit balances of £6.3 billion.

  • Over 96,000 Loyalty Bond accounts opened. £2.7 billion deposited in first four months of the account opening
  • Over 100,000 Loyalty Saver accounts opened with over 1.2 million members now holding accounts
  • Over 185,000 Flexclusive Regular Saver accounts opened in first four months of opening
  • More than 760,000 members subscribed to free SavingsWatch service which automatically lets members know when a new savings account is launched or interest on their account changes

More people choosing Nationwide for their current account

The Society has grown its current account market share during the year to 7.1%, opening over half a million current accounts (525,000). This is in part due to the fact that the Society continues to be a net gainer in current account switching.

  • Over the past year alone 129,000 people switched to the Society, up 38% on last year. This represents a 12.5% market share of switchers

Leading service satisfaction

Nationwide was ranked number one for customer service satisfaction amongst its high street peer group again this year – extending its lead to 7.7%.

  • Despite the Society’s size, it accounts for only 2% of total industry complaints
  • When cases do get referred to the Financial Ombudsman Service, 82% of Nationwide’s decisions are upheld, compared with the industry average of 47%

Building a financially strong Society

Underlying profit for the year was £1.337 billion, an increase of 9% and statutory profit before tax was £1.279 billion, an increase of 23%. This strong financial performance has resulted in a CET1 ratio of 23.2% - giving members the peace of mind that their money is safe and secure with Nationwide. Nationwide’s leverage ratio has also improved over the last year to 4.2%.

As a mutual Nationwide aims to optimise, rather than maximise, profit, retaining sufficient earnings to support future growth, sustain strong capital ratios and to allow the Society to invest in the business to provide the services that members demand. This enables the delivery of a long term, sustainable business that operates purely in the interests of our members.

Based on the Society’s current assumptions, a level of underlying Group pre-tax profit of approximately £1 billion to £1.5 billion per annum over the medium term would optimise its ability to invest to support members’ needs while maintaining its financial strength.

About Nationwide

Nationwide is the world's largest building society as well as one of the largest savings providers and a top-three provider of mortgages in the UK. It is also a major provider of current accounts, credit cards, ISAs and personal loans. Nationwide has around 15 million customers.

Customers can manage their finances in a branch, via the mobile app, on the telephone, internet and post. The Society has around 18,000 employees. Nationwide's head office is in Swindon with administration centres based in Northampton, Bournemouth and Dunfermline. The Society also has a number of call centres across the UK.

Please note: If you are a customer looking for information on our products and services, please visit the main website.