Tuesday, 23 May 2017

Nationwide profits hit by low interest rates

Profits have fallen at Nationwide after the building society sought to protect savers from the impact of last year's interest rate cut.

Statutory pre-tax profits for the year to March to £1.054bn, down 17% from last year's figure of £1.279bn.

However, Nationwide said 795,000 new current accounts had been opened in the year to March.

That was a record for the society, it said, and more than any other provider in the UK.

The rise of 35% represented one in seven of all new accounts opened. It added that nearly one in five people switching their accounts became customers of the building society.
Chief financial officer Mark Rennison said: "Nationwide has delivered a very strong trading performance over the last year, with record levels of active members, mortgage lending and current account openings."

The Bank of England cut its benchmark interest rate to a record low of 0.25% last summer following the Brexit vote. Nationwide said it kept rates unchanged on some savings accounts while passing on the rate cut to its mortgage customers.

Mr Rennison said: "We chose to protect savers from the full effects of last summer's interest rate cut, knowing that this would reduce our full year profitability in the continuing low interest rate environment, but considering this to be in our members' best interests."

BBC      News.