Friday 10 February 2017 8:26 am

Nationwide blames low interest rates as profits drop – but building society’s results were still ahead of expectations

Nationwide profits dropped during the nine months to 31 December, with the building society blaming continued low interest rates.

The figures

Underlying profit before tax dropped by 23 per cent to £866m from £1.13bn in the same period of last year.

Statutory profit before tax was down 16 per cent to £946m from £1.12bn – Nationwide said this include £68m of derivative and hedge accounting gains which are excluded from underlying profit.

Gross mortgage lending was up 11 per cent at £26.2bn from £23.6bn this time last year, which the group said represented a 14.3 per cent market share. In May last year, Nationwide said mortgage lending had reached pre-recession levels.

The number of new current accounts opened was also up, at 570,000, compared with 419,000 accounts opened in the nine months to 31 December 2015.

Why it's interesting

The building society said the prolonged low interest rate environment was the cause of its tumbling profits, and added that it expects UK economic growth to slow over the next two years, "consistent with the Bank of England view".

Nationwide added that the longer term impacts of the EU referendum vote on the UK economy will depend on a range of factors, "not least the time it takes to reach trading agreements with EU and non-EU economies and the effectiveness of other actions for improving UK trade prospects".

What Nationwide said

“Our performance in the third quarter reflects a continuation of our strong trading performance announced at the half year," said chief executive Joe Garner.

"In a period of sustained economic uncertainty our commitment to serve our members remains steadfast and true to our core purpose. We continue to take conscious decisions to support our members, delivering market-leading service and highly competitive products, which has led to a financial performance in line with our expectations."