Nationwide warns over mortgage competition as profits rise 9%

Nationwide Building Society has posted a 9% rise in annual profits, but cautioned that growth will ease back over the year ahead as it battles against competition in the mortgage market.

New chief executive Joe Garner, who took on the top job last month, unveiled underlying pre-tax profits of £1.34 billion for the 12 months to April 4, up from £1.23 billion in the previous year.

Profits surged 23% to £1.28 billion on a bottom-line basis.

The group warned profits "are likely to moderate" in its new financial year amid competition for new mortgage business and as rock-bottom interest rates put its margins under pressure.

It also said there was a risk that funding costs could surge for lenders if the global economic outlook worsens and hits UK activity.

But Mr Garner said the results show Nationwide is "not in need of radical reform".

He added: "As the new chief executive, my job will be to build on this success."