Nationwide Building Society has announced underlying profits fell 18.2% in the first half of its 2008/09 financial year.
However, the mutual’s reported profit increased during the six months to 30 September and it took a large share of the UK savings market.
Nationwide saw its underlying profit before tax fall from £394m in the first six months of 2007/08 to £322m in the same period this year.
The group says the fall in profits is primarily due to the high cost of retail funding and its decision to hold high liquidity levels in a turbulent financial market. Reported profit before tax climbed 11% to £339m.
However, the credit crunch and consequent failure of a number of banks has caused a ‘flight to safety’ among savers, the mutual says, and Nationwide received £2.6bn in savings receipts, around 34% of the UK market total.
Mortgage arrears increased from 0.36% of accounts on 4 April to 0.4% of borrowers on 30 September. Nationwide says this is far lower than the Council of Mortgage Lenders' average of 1.33%.
The average mortgage loan to value ratio increased significantly from 43% to 47% over the same period as house prices fell at record levels.
In a statement released today, chief executive Graham Beale says: “Nationwide has delivered a solid performance in a difficult market with pre-tax profit increasing by 11% to £374m.
“Our resilience proves that the building society business model can be particularly effective during turbulent market conditions in providing both security and good value to members.”
A recent merger with Portman Building Society, and rescue takeovers of Derbyshire and Cheshire building societies mean Nationwide now has 15 million members, around £200bn in assets and £120bn worth of retail deposits.
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