The UK’s largest building society blames the drop on difficult trading conditions, a low interest rate environment and margin compression.
Nationwide now has an 8.7 per cent market share of gross lending in the UK and lent £12bn in residential mortgages in the year ending April 4 2010.
Nationwide says it cannot rule out closing some of its branches and reviewing its distribution arrangements in order to reach its cost targets. The building society last week announced that it is to merge its six processing centres into two but said it is too early to say how many jobs would be lost.
It has pledged to continue to honour its base mortgage rate pledge, which states that the majority of customers have access to a rate which is capped at two per cent above Bank of England base rate.
The building society says its residential mortgage arrears percentage, for those in arrears of three months or more, was 0.68 per cent, compared with 0.64 per cent in 2009.
Chief executive Graham Beale (pictured) says: “This is a strong set of results for Nationwide, and that is particularly pleasing given the difficult trading environment that we have experienced over the past year. We have provided a safe haven for our members’ savings and supported our borrowers, and have remained very competitive in these core markets.
“I am encouraged to see that the new Government intends to bring forward proposals to foster diversity, promote mutuals and create a more competitive banking industry. This is against a backdrop of public and political pressure on regulators to be seen to act decisively to prevent a repeat of the recent financial crisis. We support the objective of a more secure and stable framework for banking regulation.
“However, it is vital that this framework is developed with the interests of the mutual sector in mind. It must not undermine the competitive position of the sector, and must avoid the unintended consequences that may arise from a ‘one size fits all’ approach to regulation. It is essential that we work together to protect building societies, and their members, for the future.”