Nationwide profits jump 39% as interest rates rise

Full-year profits at Nationwide, the UK’s largest building society, jumped 39 per cent as rising interest rates boosted the lender’s bottom line, but its chief executive cautioned about the impact of higher borrowing costs on customers.

“The transition to higher interest payments is a challenge for households as they adjust their expenditure priorities,” said chief executive Debbie Crosbie on Friday. “We will continue to support those borrowers who face payment difficulties.”

The UK lender posted pre-tax profits of £2.2bn for the year to April 4, an increase of 39 per cent year on year. Revenues for the year were £4.7bn, a 20 per cent increase.

Like other lenders, Nationwide has benefited from rising interest rates. The Bank of England increased the base rate to 4.5 per cent last week, the highest level since 2008.

The building society also said it would distribute a “fairer share payment” after the results, giving eligible members £100 each with a total value of £340mn.

Provisions for bad loans for the year were £126mn, compared with an unwinding of provisions of £27mn the previous year.

Nationwide said this stemmed from “a deterioration in the economic outlook during the year,” with low rates of arrears forecast to tick up.