By Lawrence White
LONDON (Reuters) – Nationwide Building Society <POB_p.L> reported a 33% fall in profit for the first half of its financial year, as it took a fresh charge for mis-selling insurance products and saw margins fall in Britain’s competitive mortgage market.
The bellwether mortgage lender said its underlying profit fell to 307 million pounds in the April-September period from 460 million pounds a year ago.
The results show one of Britain’s oldest and biggest mortgage lenders was still investing in technology despite tough market conditions and uncertainty before a parliamentary election and Britain’s planned departure from the European Union.
Nationwide’s net interest margin, a closely-watched measure of underlying profitability, fell to 1.12% from 1.23% a year ago as competition in the mortgage market continued to bite.
The lender said it expected the margin decline to moderate in the second half of the fiscal year.
A combination of low central bank rates and new entrants in the market have driven rates for home loans in Britain to rock-bottom levels, helping consumers but squeezing lenders.
Unlike the big banks that are its main rivals, Nationwide as a member-owned society is not under pressure to deliver ever greater returns to shareholders.
The lender has instead prioritised investing in technology, simplifying its business model and expanding into business banking.
Profits were also hit by a 36 million pound provision to cover redress for mis-sold payment protection insurance, as claims for Britian’s biggest consumer banking scandal continued to bite despite the passing of an Aug. 31 deadline for claims to be made.
(Reporting By Lawrence White; Editing by Rachel Armstrong and Edmund Blair)