Nationwide has reported a significant increase in its annual income, driven by growth in consumer lending and a larger share of the mortgage market. The Swindon-based building society posted a 22% rise in total income to £6.4bn, up from £5.2bn the previous year, reflecting a more diversified balance sheet.
Consumer Lending Drives Growth
The income boost was fueled by consumer lending, which climbed to £11.6bn from £11.1bn, primarily due to expansion in its credit card division. Credit card balances reached £8.1bn in the last financial year, up from £7.8bn. Business lending, however, edged slightly lower to £14.9bn from £15.1bn, with the firm citing increased competition.
Mortgage Market Performance
Nationwide reported continued market-leading mortgage net lending of £10.3bn, a notable decline from £15.9bn the previous year. However, the comparison is complicated by last year's stamp duty changes, which distorted figures as homebuyers rushed to complete purchases ahead of the tax increase. Despite this, the mutual's share of mortgage balances rose 0.1% to 16.3% over the period.
Profit Decline and Virgin Money Acquisition
Headline pre-tax profit dropped to £1.5bn from £2.3bn, which Nationwide attributed to a one-off gain from its acquisition of Virgin Money, from which it had pocketed a windfall of £2.3bn. The acquisition also led to a substantial increase in risk-weighted assets, rising by £5.6bn after an unexpected £3bn regulatory adjustment imposed on Virgin Money's unapproved internal mortgage models.
Regulatory Challenges
While Nationwide's own mortgage risk frameworks secured approval from the Prudential Regulation Authority (PRA) in late 2024, the building society received regulatory feedback concerning its newly-acquired business. This feedback compelled the lender to artificially increase its risk metrics for Virgin Money's portfolio by £3bn, elevating its total temporary model buffers to £3.9bn.
Leadership Changes and Integration
Virgin Money announced in April that its chief executive, Chris Rhodes, would step down in September as the UK bank fully integrates into Nationwide. Rhodes assumed leadership after Virgin Money's purchase by Nationwide in late 2024. Nationwide confirmed the completion of a legal process known as Part VII Transfer, which permits a bank to transfer all customers, accounts, and contracts to another bank without individual consent. This paves the way for Virgin Money and Nationwide to merge into a single entity, with no replacement for Rhodes expected.
Fairer Share Scheme
Nationwide also announced a further round of its Fairer Share scheme, distributing £100 to more than four million qualifying customers from 10 June.
