Nationwide reaps Help To Buy rewards

Britain's biggest building society has seen its profits rise by 150% in the first half.

by Gabriella Griffith
Last Updated: 15 Nov 2013

Helping first time buyers get onto the property ladder has been George Osborne’s schtick (at times to his detriment) for a while now – and it looks like young homeowners aren’t the only ones benefiting from Osborne’s gaggle of schemes – Nationwide is quids in too.
 
The building society has reported a bumper rise in profits in the first six months to 30 September, reaching pre-tax figures of £270m – up from £103m last year. A large part of the increase is a jump in mortgage lending – up 37% to £14bn. This gives Nationwide a 15.4% market share – making it the UK’s third biggest mortgage lender. Rather tellingly, the building society has taken an even larger chunk of the first-time buyer market, with 22%, having helped some 30,400 customers onto that first rung. MT expects there’s a box of Quality Street winging its way to 11 Downing Street now.
 
Despite the obvious benefits the government’s various mortgage schemes have had, chief executive of Nationwide, Graham Beale has been quick to join the warning chorus, and call for London property prices to be closely monitored.
 
‘If you look at some of the metrics where you compare the house price with the earnings of individuals it’s clearly increasing,’ he said.
 
‘It’s something that needs to be watched very carefully but at the moment we are not expecting to see anything dramatic happening in the housing market.’
 
The building society also took the chance to call for 'the powers that be' to increase the cap placed on ISAs and the amount can savers plough into them.
 
‘We reiterate our call for the Government, as a minimum, to address a current anomaly and to increase the annual limit on funds that can be deposited into a cash ISA to £11,520,’ it said. Well, with interest rates still so low, Nationwide can’t lose out on that one.
 
It looks like Nationwide could also be enjoying the results of the government’s drive to make it easier to switch bank accounts – the building society welcomed 214,000 new current account holders – up 16% on the same period in 2012. Having a reputation as clean as a whistle must help in that department - the building society, which is still a mutual, has avoided being tarnished by the cacophony of banking scandals over the years - making it a sensible choice for morally dissatisfied switchers.
 
All of this has helped to push Nationwide’s core tier 1 capital ratio up from 12.3% in April, to 14.2% - a damn sight higher than other, larger banks.
 
‘There is no change to our long term strategy,’ said Beale (well if it ain’t broke). ‘Our vision remains to be the first choice for financial services.’
 
Meanwhile, across the City, a rather more subdued mood has settled over Barclays bank – it has announced it will cut 1,700 jobs from across its branch network – part of its plan to scale back its volume of high street stores.
 
The bank has said the reduction comes at a time when people are accessing their banking services differently – namely through their smartphones and tablets.
 
The bank has a fair point; a survey released yesterday by vouchercloud.com found one in six 18- 30 year old has never visited their bank – half of all respondents admitted they had no idea where their local bank was, while 57% said they mostly used online banking.
 
The job cuts will affect a range of customer-facing roles including cashiers, personal bankers and branch managers.
 
Unions have naturally piped up and called for urgent discussions with Barclays over the cuts.
 
MT suggests if any of the branch staff have a particular penchant for regulation, they might look into a career in compliance – we hear Barclays is lacking in that department at the moment…

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