Nationwide income soars on consumer lending boost
Nationwide booked a hefty jump in its annual income as the building society benefited from a boost in consumer lending and clawed out a bigger market share of mortgage balances.
The mutual recorded a 22 per cent jump in total income to £6.4bn, which was up from £5.2bn in the previous year, led by a more diverse balance sheet.
The jump came as consumer lending swelled to £11.6bn, from £11.1bn, primarily driven by a growth in its credit card division. Balances hit £8.1bn in the last financial year, up from £7.8bn.
Business lending took a slight dip, falling to £14.9bn from £15.1bn, as the firm pointed to a competitive market.
Meanwhile, Nationwide said it continued with “market-leading” mortgage net lending at £10.3bn. This a large drop from the £15.9bn secured last year, though came under differing circumstances with last year’s stamp study changes distorting figures as homebuyers rushers to complete their purchases ahead of the tax hike. Still, the mutual’s share of balances increased 0.1 per cent to 16.3 per cent in the last year.
Headline pre-tax profit also took a hit, falling to £1.5bn from £2.3bn. The building society pointed to a “one-off” gain following its acquisition of Virgin Money, where it banked a windfall of £2.3bn
Nationwide intervenes in Virgin Money’s risk model
The takeover did lead to a major jump in risk-weighted assets, which were up £5.6bn after an unexpected £3bn regulatory adjustment slapped onto Virgin Money’s unapproved internal mortgage models.
While Nationwide’s own mortgage risk frameworks successfully won approval from the Prudential Regulation Authority (PRA) in late 2024, the building society revealed it had received “regulatory feedback” regarding its newly-acquired business. This feedback forced the lender to artificially inflate its risk metrics for Virgin Money’s portfolio by a staggering £3bn, pushing its total temporary model buffers to £3.9bn.
Virgin Money revealed in April that its top boss, Chris Rhodes, would retire in September as the UK bank fully consolidates into the Nationwide umbrella.
Rhodes took the reins at Virgin Money following its acquisition by Nationwide in late 2024. Nationwide confirmed its completion of a legal process known as Part VII Transfer on the same day, which allows a bank to move all its customers, accounts, and contracts to another bank without needing to ask every single customer for individual permission.
This sets up Virgin Money and Nationwide to be consolidated into one single entity, with the indication that a successor for Rhodes will not be required.
The process covers the entirety of Clydesdale Bank, which is the legal entity that owned Virgin Money and Yorkshire Bank.
Nationwide said on Thursday it will kick off another round of its Fairer Share scheme, dishing out £100 to more than four million eligible customers from 10 June.