By Iain Withers and Lawrence White
LONDON (Reuters) - Britain's bellwether mortgage lender, Nationwide Building Society, reported a 21 percent fall in profits for the first nine months of the year after ramping up its investment in digital banking.
The lender is investing to make sure its systems can cope with more customers. It is building up its business banking capabilities and providing better and simpler digital services, Chief Operating Officer Tony Prestedge said.
Nationwide reported statutory profits of 703 million pounds ($910 million) for the nine months to December, compared to 886 million pounds for the same period a year earlier. It booked a 167 million pound charge for technology investment.
"The technology investment program is around 1.3 billion pounds in magnitude, we are still at the early stages of the cash spend," Nationwide Chief Executive Joe Garner said.
Nationwide is the third largest provider of home loans in Britain with a market share of around 13 percent. It said it expects its retail lending margins to continue to shrink.
The firm's net interest margin - a closely-watched measure of underlying lender profitability - fell to 1.26 percent, compared to 1.33 percent a year ago, amid intense competition in the home loans market.
It has decided not to provide updates on its results for the first and third financial quarters in the future, saying such regular reporting is not consistent with its longer-term strategy.
Unlike rival listed banks such as Lloyds and Barclays, the company is not under pressure to deliver ever higher profits as it operates as a society owned by its customers.
Nationwide has said it is comfortable keeping annual profits at between 0.9 billion and 1.3 billion pounds per year.
In the bank's first half results in November it reported a 17 percent drop in profits to 516 million pounds, which it said was largely down to making a 135 million pound investment in improving its digital banking services.
(Reporting by Iain Withers and Lawrence White; Editing by Elaine Hardcastle)