27th Nov 2024 11:42
(Alliance News) - Nationwide Building Society on Wednesday posted a steep fall in profit and revenue amidst "challenging" economic conditions, in its first earning release following its acquisition of retail bank Virgin Money UK.
The Swindon, Wiltshire-based mortgage lender is the UK's largest building society. It reported a 43% decrease in pretax profit to GBP568 million for the six months ended September 30, down from GBP989 million a year before.
Revenue fell by 15% to GBP2.15 billion for the same period from GBP2.52 billion a year before.
Nationwide attributed this to its commitment to offering competitive rates despite "challenging" economic conditions.
The lender said that economic outlook in the UK remains "uncertain", but noted that the interest rate outlook suggests that it expects to have passed "peak profitability".
However, Nationwide said lower interest rates and "resilience in real earnings" are supporting consumer finances which should support a strengthening in housing market activity and overall deposit growth.
Nationwide saw record first half growth in mortgages and deposits during the first half of the year.
Lending increased ten-fold to GBP6.3 billion for the half, up from GBP0.5 billion a year before.
Nationwide acquired Virgin Money UK PLC for GBP2.8 billion, marking the UK's biggest banking merger since the financial crisis in 2009. The deal was completed in October, so after the end of the half-year period.
Nationwide said that, since buying Virgin Money, it has booked an accounting gain of GBP2.3 billion, based on the value of the net assets acquired being above the price paid.
Virgin Money also released its half-year results on Wednesday.
Pretax profit more than doubled to GBP279 million for the six months ended September 30 from GBP109 million a year before.
Revenue rose by 9.3% to GBP998 million for the same period from GBP913 million a year before.
Virgin Money attributed this to efforts to cut costs across the business.
Virgin Money paused its restructuring plans after agreeing to be bought by Nationwide earlier this year, but said it still made cost savings of GBP187 million over the past year.
Nationwide Chief Executive Debbie Crosbie commented on the acquisition: "Following the acquisition of Virgin Money, we will use our ongoing financial strength to deliver even greater value to Nationwide and Virgin Money customers, through competitive rates, focus on customer service, and our unique 'branch promise'."
Nationwide plans to broaden its product range to include business banking, following the acquisition.
By Lydia Doye, Alliance News news reporter
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