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Profits fall at Nationwide in face of 'intense competition'

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Nationwide House in SwindonNationwide House in SwindonProfits at building society Nationwide – Swindon's largest employer – have fallen for the second year in a row.

Britain's largest building society – which employs more than 7,000 people at its UK headquarters in Swindon and in branches in the town – reported a 7.3 percent fall in profits to of £977m for the year to April 4, down from £1,054bn the previous year.

The member-owned company cited “intense competition” affecting demand for savings and mortgage lending, which dropped to £5.8 billion from £8.8 billion.

While it recorded gross prime mortgage lending of £29.4bn – up from £29.1bn in 2017 – mortgage net lending of £5.8bn was down from £8.8bn in 2017, reflecting what Nationwide called "high levels of competition" which pushed down rates.

However, it recorded the number of current account openings in the UK – up from 795,000 to 816,000 – and enjoyed a record market share of 7.9 percent for main standard and packaged accounts, and 9.4 percent for all current accounts.

Chief financial officer Mark Rennison said: “Nationwide continues to trade strongly in spite of intense competition in our core markets, in a number of cases choosing to protect value for members through more competitive pricing rather than taking the opportunity to enhance margin.

“While growing our business, we delivered on our commitment to hold costs flat, thanks to our Society‐wide efficiency programme.

“This strong trading has translated into stronger than ever finances for the Society. Our core capital ratio is at an all‐time high of 30.5 percent, and we improved our already conservative UK leverage ratio to 4.9 percent, well ahead of regulatory requirements.

“After investing in our business and in the value we offer to members, our pre‐tax underlying profits were broadly flat at £1,022 million – and within our financial performance framework.

“We expect technology innovation to accelerate, driven by digital adoption, mobile service take-up and Open Banking.

"We are reviewing our operations and technology to ensure Nationwide can take the opportunities ahead and meet the challenges posed by increasing dependence on technology and growing cyber threats.

"We do so having achieved a position of financial strength, good trading performance and demonstrable cost discipline. We will update on these plans and the investment required later in the year.”

Chief executive Joe Garner said: "“Nationwide’s defining difference is that we’re owned by our members. This informs how we operate and the decisions we make. So we continue to focus on delivering what members tell us matters most – outstanding service and great value, backed by record capital strength."