Nationwide falls but stays bullish on Brexit Britain

Britain’s biggest building society Nationwide today said it was confident that the UK will continue to cope through the Brexit negotiations and departure from the European Union.

That is despite it seeing a sharp drop in first-half profits and warning that future margins and profits are likely to fall as interest rates remain lower for longer.

“I have a lot of confidence in the UK and how it can cope with the future around Brexit and I have confidence in our customers,” chief executive Joe Garner said.

“The world is very focused on rates and ratios at the moment but the key for us, as a mutual which can take a long-term view, is to support the housing market and offer value to savers. We have seen no change in our customers’ behaviour since the Leave vote.”

Nationwide, which has 14 million members, said it will pass on last week’s cut in base rates to a record low of 0.25% to its customers.

It will cut variable mortgage rates, which apply to the 50% of its borrowers who do not have fixed mortgages, but has decided to leave some of its regular savings rates unchanged.

“We are really keen to promote the savings habit so will reward regular savers,” said Garner.

“We also pay our members higher interest on their accounts than the big banks.”

Nationwide reported a drop in headline profits from £391 million to £368 million in the three months to end-June. That was flattered by the £100 million it received for its stake in Visa Europe, which was taken over by US Visa.

The building society increased gross mortgage lending by 26% in the quarter to £8.6 billion, helped in part by a surge in demand for buy-to-let mortgages ahead of tax changes which started in June.

It attracted 139,000 new customers to its current accounts and is still one of the clear beneficiaries of simpler switching rules. Savers put an extra £2.6 billion into its coffers.

The fall in profits reflected a lower net interest margin and higher costs as the group invested more in technology, cyber-security and online and mobile banking.