Joe Garner

For the six months to September 30, the lender saw its net interest income grow to £1,706m, compared to £1,448m in 2020, with higher margins on mortgages as Nationwide continued to lend in the early stage of the pandemic.

The society also posted a net release of £34m credit provisions as the economic outlook improved while retaining provisions to reflect current uncertainty.

Nationwide also posted a £133m increase in other income, reflecting higher income from banking products and supported by gains from investments.

The lender’s net interest margin improved to 1.24% (H1 2020: 1.15%) and is broadly stable against H2 2020; this is expected to moderate in future.

Nationwide’s gross mortgage lending grew by £5.5bn to £18.2bn (H1 2020: £12.7bn); the society’s market share was 11.4% (H1 2020: 12.0%) in a buoyant and highly competitive market.

Joe Garner, chief executive, Nationwide Building Society, said: “Early in the pandemic we made decisions to stand by our members and to protect our financial strength. This year we continued to support our members and have delivered a very strong half year performance, with capital reaching an all-time high. As a mutual, profits are retained to invest in the Society for the benefit of its members and wider society over the long term.

“Over the last six months we have focused on providing highly competitive products for our mortgage and savings members. These have been very popular, resulting in a successful ISA season, increased deposits, higher mortgage lending, and a larger share of the current account market. We continue to focus on providing the high-quality personal and digital service our members expect of us, and have led our peer group on satisfaction for over nine years. We have delivered value to members through our member prize draw, the restarting of our current account switching incentive and the launch of a scam checker service.

“Our success is a testament to the strength of our mutual business model, to the hard work of our colleagues, and to the value we provide to our members. Given the level of uncertainty about the future, the strength of our finances gives us freedom to make choices, and confidence in continuing to support our members, colleagues and communities.”

Chris Rhodes, chief financial officer, Nationwide Building Society, added: “During the last six months, the Society has delivered strong performance across our three main product areas of mortgages, savings and current accounts. During the pandemic, strong demand for mortgages, coupled with macro-economic uncertainty, led to higher margins on mortgage lending. This resulted in significantly higher income, and a very strong overall financial performance. Net interest margin improved, but is unlikely to be sustained at this level in future due to intense competition in the mortgage market.

“We have continued to focus on efficiency and our costs remain flat despite further investment and growth of our business. While the improving economic outlook led us to release some of the credit provisions taken during the pandemic, there still remains significant economic uncertainty. Our balance sheet strength, as evidenced by our very strong CET1 and UK leverage ratios, means we are well positioned for what remains an uncertain period ahead.”