View more on these topics

Nationwide slams FSCS charge as profits fall 69 per cent

Nationwide’s profits before tax fell 69 per cent to £212m for the year to April 4.

The firm has attacked a one-off Financial Services Compensation Scheme charge of £241m – which accounted for more than half of the drop in profits – claiming it was “illogical and unfair”.

The charge covers the group’s share of interest for the full three-year period of the Treasury loan to the FSCS.

Nationwide chief executive Graham Beale says: “We regard the fact that the FSCS charge is not linked to the level of risk posed to the financial system by individual institutions, but instead is allocated by share of the retail savings market, as illogical and unfair, producing a disproportionate outcome for the low risk retail funded institutions, particularly building societies. This view is shared by 173 cross party MPs.

“Our reported profit is 53 per cent lower than it would otherwise have been because there is an exceptional charge of £241m relating to the levies payable to the FSCS.”

Beale adds that low interest rates and the contraction of the mortgage market helped push profits down.

He says: “Profitability has been adversely affected by the low interest rate environment and increased provisions as a result of the current recession.

“The size of the mortgage and savings market has contracted significantly in the year as a result of the extreme economic conditions.”

The firm expects market conditions to remain challenging throughout 2009 and beyond. It believes the low interest rate environment will continue to depress margin and higher levels of unemployment and business failures will inevitably lead to increased loan loss provisions.


Moving the goalposts

Financial services must be the laughing stock of other industries with our “roll over and play dead” attitude. We have a history of being dumped on to the extent that it is now self-perpetuating.


We are all hoping predictions that the economy is now in better shape and bottoming out of recession are correct. One thing that is certain is that the downturn has had a fundamental effect on people’s financial planning and on how they regard financial matters.

The Investment Clock: Keep calm and Macron!

Trevor Greetham, Head of Multi Asset In a marked contrast to the surge in risk sentiment that followed President Trump’s election in November, markets greeted Emmanuel Macron’s victory in the French presidential election with satisfaction and relief, rather than euphoria. After rallying strongly on opinion polls that accurately predicted the outcome, the euro held onto […]


News and expert analysis straight to your inbox

Sign up


    Leave a comment