Nationwide posts 62% fall in H1 profits
Britain’s largest building society, Nationwide, posted a slump in first half profits and provided a gloomy assessment of the housing market as it unveiled its results.
Nationwide said pre-tax profits for the six months to September 30 were £143 million, a fall of 62% compared with the £374 million posted a year earlier.
The company attributed the fall to the low interest rate environment and the “dramatic fall” in commercial property prices.
Nationwide’s chief executive, Graham Beale, comments: “Looking ahead, we expect the remainder of this year and next to present a very difficult trading environment.”
Bad debt provisions totalled £317 million during the period, compared with £74 million in the same period a year ago but little change from the £320 million in the six months to April 2009.
Mr Beale also warned: “Economic recovery is forecast to be slow and we expect interest rates to remain at their current level until at least the fourth quarter of 2010.
“We are also cautious on future prospects for the housing market. The growth in house prices over recent months appears to be driven by lack of supply, and growth in unemployment throughout 2010 will inevitably exert downward pressure on house prices.”
There has been much consolidation within the building society sector after Nationwide rescued Scotland’s Dunfermline Building Society at the end of March. It also rescued Cheshire and Derbyshire building societies in 2008.
The credit crisis has resulted in a number of smaller societies being rescued by their bigger rivals. Britannia Building Society recently completed its merger with Co-operative Financial Services.
However, Nationwide said losses expected from the mergers with Derbyshire and Cheshire and the purchase of Dunfermline’s assets were “in line with expectations.”
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