It’s around eight years since the financial crisis kicked off, but many of the big institutions are still going through serious turmoil as they slim down and prepare for a future where they simply won’t be as big. One lender that seems to be pretty trouble-free, though, is Nationwide.
Today the building society said its pre-tax profits shot up 34% in the six months to September as its mortgage lending jumped 14% to a record high of £14.9bn. The mutual also attracted more than 250,000 new current account customers, up 13%.
'Our first half performance reflects the growing strength and security of the Society with all of our core product areas delivering standout results,' said its chief exec Graham Beale, who looks set to go out on a high when he hands over the reins to current Openreach boss Joe Garner in the spring.
Though its market share for current accounts is just 6.9%, Nationwide is the second-largest provider of mortgages in Britain, partly because building societies are required by law to have a high proportion of secured property lending on their balance sheet. It ‘[helped] 25,700 people to take their first step onto the property ladder,’ in the period, the company said.
Such exposure to the property market is a risk, of course (though Nationwide did pass the Bank of England’s stress tests last year). Beale warned this morning that house price rises could be getting out of hand, especially in the capital. ‘I am not saying there is going to be a crash but at the current rate of price rises fewer and fewer people will be able to afford to buy in London,’ he told the Evening Standard.
Beale also took the opportunity to talk up the virtues of Nationwide’s mutual structure, through which it is owned by its customers rather than having to answer to shareholders. ‘Mutuals, like Nationwide, are different from the banks,’ he said. ‘We serve a social purpose by providing a safe home for savings and finance for home ownership. Nationwide is evidence that you can be successful by doing the right thing.’
Mutual ownership might not have worked so well for the Co-operative Bank, but it seems to be paying off for Nationwide - for now at least.