Nationwide slides after loans switch

NATIONWIDE building society today reported a 30% slump in pre-tax profits to £325.7m, demonstrating the cost of offering the same deals to new and existing borrowers.

The mutual's share of the UK mortgage market fell two-thirds to 9.1% in the year to 4 April after it stopped trying to lure new borrowers with special low rates. The lender expects to see the house-price rise slow from its current 10% between the summer and autumn.

Chief executive Philip Williamson defended the one-size-fits-all rate policy, saying that although net lending had more than halved to £1.8bn, Nationwide had written more new business in the second half than in either half of the previous year.

The mortgage rate paid by 600,000 borrowers has been cut by 0.6%. Members have benefited from about £520m in better interest rates and lower charges. 'We are a building society so we are not in the business of measuring profits but delivering value,' Williamson said.

Group charge for bad or doubtful debts fell 18% to £36.8m. Nationwide's directors intend to hang on to the building society's mutual status, and will refuse to put to the 25 July annual meeting a resolution that Nationwide converts to a bank.