Nationwide, the UK’s largest building society, today said it was ahead of plan with its integration Virgin Money as it posted increased half-year underlying profits and a 46% rise in income.
The Swindon-headquartered mutual, which acquired Virgin Money 13 months ago for £2.9bn, posted total underlying income of £3.1bn for the six months to September 30 – up from £2.1bn in the same period last year – helped by growing market share in savings and mortgages.
Underlying profit before tax for the period 1 April to 30 September increased by 1.9% to £977m, with income, costs and credit impairment charges all increasing due to the acquisition of Virgin Money.
Statutory profit before tax was £486m against £568m after taking account of the £400m ‘fairer share payments’ of £100 each it made to members following the Virgin Money takeover.
The group, the UK’s second largest provider of home loans and savings, said it had also enjoyed a strong performance in mortgages and retail deposits.
Retail deposit balances increased to £266bn from by £5.3bn, and while net mortgage lending fell from £6.3bn to £4.7bn that still increased Nationwide’s market share to 16.3% from 16.2%.
Dame Debbie Crosbie DBE, group chief executive officer, said the building society was now “number one for growth in mortgages and retail deposits”, adding that “more people switched their current accounts to us than to any other brand”.
“All of this, combined with the benefits of our acquisition of Virgin Money, has led to an increase in underlying profit before tax while delivering £1.2 billion of value to our members,” she said.
Nationwide also said it was well placed to support its customers through ongoing economic uncertainty.
“Against a backdrop of modest UK economic growth in the period, interest rates are expected to reduce further in response to inflation returning gradually towards the Bank of England’s 2% target,” it said in comments alongside its interim results.
“The outlook for growth, inflation and interest rates remained dependent on reactions of households and businesses to economic and fiscal policies.
“The housing market, business activity and growth in deposits have all remained resilient and household finances remain healthy.
“Despite labour market conditions having softened, the credit quality of our lending portfolios, and the adequacy of our capital resources, remain strong.”
Following its acquisition of Virgin Money, Nationwide has 24.5m customers, including 16m members – meaning it has connections with around one in three of the UK population.
The takeover also increased its branch network by 91 to just under 700. The enlarged group employs around 25,000 people, including more than 6,000 in Swindon, although there have been some reported job losses since the takeover due to outsourcing.
