Nationwide Building Society has reported a 46% drop in
underlying pre-tax profit to £212mn in the year to 4 April 2010,
down from £393mn ($480.2mn) in the year to 4 April 2009.
The UK’s largest building society said low interest rates
continued to hit earnings with the forecast for the next fiscal
year expected to reap “lower levels of profitability”.
The building society also outlined plans to speed up cost cuts
to hit a cost-income ratio of less than 50% by the end of 2012/13
from a current 61.3%.
As part of the cost-cutting drive, the bank said it would review
its distribution network, hinting at branch closures.
A spokesman for the bank did not rule out branch closures in the
long-term, however he would not be drawn on specific numbers of
branches to be closed.
The spokesperson told RBI: “We will continue to look
carefully at our distribution network to ensure it meets the needs
of the society and its members.”
Nationwide has seen a 15% drop in branch numbers in the last
decade (see RBI 630-631) and
now stands at around 700 branches.
It lent £12bn of mortgages over the past financial year,
representing a market share of 8.7%, down from 9% in 2008-09, while
the society reported £8.2bn in net outflows in its savings
business, compared with inflows of £1.7bn the previous
It said the fall in savings was down to competition for customer
deposits from banks and government-backed businesses, but added
that it had begun to stem the flow in the second half of the
Graham Beale, chief executive, said that the results were
satisfactory given the difficult trading environment.