Nationwide profits down 40%
Nationwide has warned savers that it will be unlikely to pay above-average savings rates this year due to a fall in profits.
The building society had planned to offer members better rates on savings but has had to scrap some of its targets due to losing more than £100m during the pandemic.
Nationwide chief executive Joe Garner said: “As the full impact of the coronavirus on our members and business becomes clearer, some of the targets we set ourselves may not be achieved in the short term.
“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 per cent, paying savings rates significantly higher than this would not be financially sustainable, nor in the long-term interests of our members or the society.”
Nationwide reported an underlying profit before tax of £469m this year, down from £788m in 2019. It has put aside £101m for expected credit losses resulting from the coronavirus outbreak.
“In the last month of our financial year all our lives have been overshadowed by the coronavirus. 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,” said Garner.
“We’ve taken steps to protect our employees’ physical and mental health so we can maintain essential services to our members, and we’ve gone a step further and promised that everyone’s job is safe in 2020.”
As well as the coronavirus, Nationwide has also been impacted by payment protection insurance (PPI) claims.
Nationwide said it opened 759,000 new current accounts in the past year, down from 794,000 the previous year. The building society regularly tops the table for new current account customers but has been overtaken by digital challenger Monzo, according to Pay.UK.
Nationwide announced a Covid-19 support package for members last week.