Nationwide 9M results highlight increasing margin pressure and the increasingly competitive mortgage market.

Pre-tax profits are down by 21% for the 9 months to end December to £703m from £8886m a year ago.

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Notably, the Nationwide net interest margin is down by 7 basis points to 1.26% from the year ago period.

Nationwide 9M earnings are impacted by the society’s previously announced increased spend on technology. And this is also impacting its cost-income ratio. For the first nine months of the current fiscal, Nationwide’s underlying cost-income ratio is 68.4% (9M17: 57%).

On the other hand, Nationwide continues to make impressive market share gains.

Nationwide 9M 2018/19: highlights

In particular, current accounts remain a growing strength for Nationwide as it continues to win market share.

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More than one in five switchers (21.6%; Q3 2017/18: 19.5%) chose Nationwide, increasing customer numbers by 5% to 7.7 million.

As a result, Nationwide now has a 7.9% current account market share.

Other highlights include:

  • Gross mortgage lending grows by 11.2% year on year to £26.8bn. This results in a market share of 12.9% against 12.3% a year ago;
  • Net mortgage lending is up by 56% to £6.1bn for a market share of 15.2%, up from 10.4% a year ago;
  • Member deposits are up by 4% to £153.9bn. This equates to a market share of deposits of around 10.1%, and
  • Capital is further strengthened with a CET1 ratio of 31.7% (4 April 2018: 30.5%).

Nationwide remains committed to pitching for a share of the RBS Alternative Remedies Package. Accordingly 2019 plans include the launch of a Nationwide small business current account.

The long-awaited RBS Alternative Remedies Package is worth in total £775m.

Nationwide Building Society CEO Joe Garner says: “Looking ahead to the fourth quarter, as consumers continue to benefit from considerable choice, we intend to remain competitive. Thus we expect that lending margins will continue to moderate.”

He adds that costs are flat period on period, excluding asset write-offs and additional IT investment. “We are on track to deliver £100m of sustainable saves within the 2018/19 year.”