Nationwide Building Society: Distributing £385 Million to Customers
Nationwide Building Society, the largest in Britain, has had a successful financial year driven by higher interest rates and is now planning to distribute approximately £385 million directly into customers’ accounts. This exciting news comes after Nationwide reported a pretax profit of £1.78 billion for the year ending 4 April, making it a great year for the building society.
The board of Nationwide has approved a £100 “Fairer Share” payment to be made next month to 3.85 million eligible customers with a savings account or mortgage. This gesture is a way for Nationwide to give back to its loyal customers and provide them with added financial support.
Unlike traditional banks that distribute excess capital to shareholders, Nationwide, as a mutually-owned building society, focuses on reinvesting in its business or providing members with enhanced rates on savings and loans. This customer-centric approach has allowed Nationwide to deliver a “member financial benefit” worth £1.85 billion over the past year, reflecting the additional interest paid compared to market averages.
Higher interest rates since the Bank of England began increasing borrowing costs in December 2021 have been beneficial for Nationwide, boosting its lending income. However, the competitive mortgage market has offset some of these benefits, with Nationwide’s gross mortgage lending dropping 22% over the year.
Looking ahead, Nationwide acknowledges the challenges in the mortgage market and the potential rate cuts by the central bank. Despite these pressures, Nationwide remains optimistic about the future, stating that mortgage activity is likely to improve over time as affordability pressures ease and mortgage rates become more moderate.
In addition to its financial success, Nationwide has seen significant growth in member deposits, reaching £193.4 billion. This increase was driven in part by a market-leading £200 current account switching bonus that attracted over 163,000 new customers. To further engage existing members, Nationwide is launching a new £200 current account switch offer and offering a competitive bond with a 5.5% interest rate for 18 months.
Chief Executive Debbie Crosbie expressed her pride in Nationwide’s performance, stating, “We delivered our highest ever member value and our strong financial performance means we can extend the ways that members benefit from our success. We provide our members and customers with great value products, choice in the way they bank with us, and simply brilliant service.”
In an exciting development, Nationwide is finalizing a significant £2.9 billion acquisition of Virgin Money, marking its entry into the business banking market. This move will allow Nationwide to diversify beyond interest rate-sensitive savings and mortgages and is expected to result in potential gains of up to £1.5 billion.
Overall, Nationwide’s commitment to putting customers first and delivering value through competitive rates and innovative products has been key to its success. By continuing to focus on member satisfaction and financial stability, Nationwide is well-positioned for a bright future in the competitive financial services industry.