Nationwide blames interest rates for poor profits


Nationwide Building Society today warned that low interest rates will continue to take their toll for the remainder of the year after sending its profits on a steep downhill slope last year.

The UK’s biggest building society reported a 46% fall in underlying pre-tax profits to £212 million for the year to 4 April after interest rates sank to a record low of 0.5% 14 months ago.

This follows on from a 69% fall in profits for 2008.

The group said it expected the difficult conditions to continue throughout the year with interest rates set to remain low until the economic recovery gathers pace.

Meanwhile it said its share of the mortgage market dropped to 8.7% from 9% in 2009 after seeing negative net residential mortgage lending of £3.6 billion in the year to April.

However, the group added it expects property prices to remain stable over the next year, with any "major dip" unlikely.

Its savings business was also under pressure with £8.2 billion in net outflows amid stiff competition for consumer deposits. It added that this trend had begun to reverse in the second half.

Nationwide added that it is now considering making possible cuts to its administration centre network as it looks to avoid duplication following mergers with the Derbyshire and Cheshire building societies and the takeover of ailing Dunfermline's savings assets last March.