Nationwide Building Society increases capital amid jobs and Brexit uncertainty

reported a near-flat underlying profit for the first half of its financial year as its margin stabilised.

The mutual said its conservative approach to business resulted in an even stronger capital base, with a CET1 ratio of 34.5% at the end of September up from 31.9% at its April year-end.

Although £139mln has been set aside as provisions for loans that may not be repaid, following £101mln at the end of its last year, the building society said arrears remained low.

It provided 246,000 mortgage payment holidays due to homeowners being affected by the coronavirus lockdowns, with repossessions frozen and interest-free overdrafts offered.

The underlying profit of £305mln was down from £307mln this time last year, with net interest income up but other income down, and net interest margin at 1.15% compared to 1.12%.

Statutory profit increased to £361mln from £309mln.

“It is very hard to predict what will happen to the economy, jobs and the housing market in the near future as a result of the pandemic and Brexit,” management said in a statement alongside the results.

“The scale of interventions to support people and jobs to date has been extensive and will limit the long-term damage, but the outlook remains unpredictable.”

While activity in the housing market fell sharply in lockdown it has recovered strongly afterwards and Nationwide said it faced the UK’s economic uncertainty “from a position of considerable strength”.