Low interest rates see profits slump at Nationwide

Building society Nationwide said its annual profit slumped by almost a quarter, as it held rates for savers and passed on lower interest rates to its mortgage borrowers.

Britain's second-biggest mortgage provider said core full-year profit fell by 23% to £1.05bn to 4 April compared to a year ago, as it gave back £505m to members by "maintaining selected savings rates".

But the mutual added that its membership numbers hit an all-time high of 15 million, while its gross mortgage lending lifted 3% to £33.7bn from a year ago.

The group said it helped a record 75,000 first-time buyers purchase homes, up 31% in the period, and opened 795,000 new current accounts, up 35%.

Bank of England interest rates remain at 0.25%, and Nationwide said passing on this low rate to borrowers as well as keeping attractive saving rates hurt profits.

Nationwide chief executive Joe Garner said: "As a member-owned organisation, we don't seek to maximise our profits but to manage them in our members' interests.

"The combination of the low interest rate environment and our decisions to protect savings rates for longer led to an exceptional year for member value."

The group said households were "alive to the economic uncertainties that lie ahead" as Brexit negotiations unfold over the next two years.

It added it expected the housing market to cool, but because of supply shortages it still expected house prices to rise by 2% this year.