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Nationwide profits slump as it takes £101m hit from Covid

By Michele Maatouk

Date: Friday 29 May 2020

Nationwide profits slump as it takes £101m hit from Covid

(Sharecast News) - Building society Nationwide posted a drop in full-year profit on Friday as it took a hit from coronavirus-related payment holidays.
In the year ended 4 April, pre-tax profit slumped to £466m from £833m the year before. This includes an additional provision of £101m for expected credit losses resulting from the coronavirus pandemic, and reflects lower income, increased investment costs, and higher PPI charges.

Net interest income fell by £105m to £2.81bn and the net interest margin moderated to 1.13% from 1.22% in 2019. This was attributed to strong competition in the mortgage market during the year and the unexpected interest rate cut by the Bank of England in March in response to the coronavirus.

Chief executive Joe Garner said: "We are helping members in financial difficulty with payment holidays on mortgages and loans and interest-free overdraft periods, and we have promised that no mortgage member will lose their home over the next 12 months due to the impact of the coronavirus.

"While the coronavirus impacted our profitability in the last few weeks of the year, there was pressure on margins even before it hit."

Nationwide said that some of the targets it had set itself may not be achieved in the short term as the full impact of the pandemic becomes clearer.

"In particular, exceptionally low interest rates mean it is unlikely we will meet our member financial benefit target next year. With bank base rate at 0.1%, paying savings rates significantly higher than this would not be financially sustainable, nor in the long-term interests of our members or the Society," it said.

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