Nationwide profits rise but net lending tumbles

Nationwide has chalked up another rise in profits despite enduring a hefty drop in net lending and warning over the squeeze on household spending power.

Britain's biggest building society saw underlying pre-tax profit rise 2% to £883 million for the nine months ending in December, boosted by the £26 million sale of its payments system VocaLink.

However, intense market competition took its toll on net lending for prime mortgages, which sank 41% to £4.3 billion over the period.

Its current account performance made for brighter reading, with the number of openings rising 8% to 617,000 accounts.

Chief executive Joe Garner said the firm had traded "strongly", but expects the UK economy to grow "modestly" in the coming months as he flagged a "noticeable" slowdown in consumer spending.

He said: "As we anticipated, a subdued buy to let mortgage market, plus sustained competition, slowed the pace of growth in our mortgage book.

"With third quarter mortgage reservations significantly stronger than for the same period last year, we expect a strong final quarter for our gross lending."

On a statutory basis, profits fell 6% to £886 million over the nine-month period, while gross mortgage lending slipped to £24.1 billion, down from £26.2 billion compared to the year before.

Mr Garner added: "Looking ahead, we expect the economy to continue to grow but only modestly.

"Consumer spending, which has been a key driver of growth, has slowed noticeably, and almost three quarters of those surveyed in our Brexit Consumer Panel expressed concern about the rising cost of goods and services.

"Modest economic growth is also likely to hold back the housing market and house price growth."

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