NATIONWIDE’S profits fell by a whopping 40 per cent as it sustained a hit of more than £100 million from the coronavirus pandemic.
The Swindon-based building society’s underlying profit before tax dropped from £788 million to £469 million in the financial year ending April 4.
Deputy chief financial officer Alison Robb told the Adver that the company had been expecting a dip in profits before the pandemic hit the UK but its unprecedented impact did make things worse.
She added: “There’s no doubt we were expecting to see profits fall on the back of increased investment in the business, and we had a really competitive mortgage market in the first part of the year which meant we were making less money from that.
“Then the challenges of the pandemic came near the end of the financial year and we increased our credit provisions by £101m, which was unexpected.”
The business has allowed its mortgage holders to apply for payment holidays to help them through the economic downturn.
Around 280,000 customers have taken a payment holiday with Nationwide, the vast majority of which are for mortgages. The building society promised that no-one will lose their home in the next 12 months because of the impact of coronavirus.
Ms Robb reassured customers that the building society was doing everything it could to help them during this difficult time.
She added: “The main thing I would say to our members is that Nationwide is an incredibly safe and secure financial organisation. We have around £2.5 billion of capital – more than we need for regulatory purposes – and £30 billion of liquidity in the business.
“As a mutual, we don’t have to maximise our profits. The important thing is delivering enough profits to stay safe and secure and able to invest in the future of the business.
“We can weather the storm of variable profitability and we don’t have shareholders who we have to reward. So we want to continue this fantastic service and we’ve invested heavily to be resilient and available 24/7.
“Most importantly, we’re continuing to invest and, over the last eight weeks, we have kept our branches and contact centres open. Our people have worked incredibly hard because member service has been at the top of our priorities.
“We are really proud of the work we’ve been doing with or our members, particularly those seeing financial difficulties because of the current environment. We’ve been responding to that and we’ll continue to do that.”
Around 11,000 Nationwide staff are still working from home, which has left huge offices like the Pipers Way HQ mostly empty, while those that stayed put have seen increased safety measures introduced on-site.
Ms Robb added: “What’s been at the front of our mind is the safety of employees and members. We’re only at the start of the journey of understanding what the new normal will be. We expect our big offices to be at a third of their normal capacity for safety and security reasons while a lot of our staff work from home for a long time.
“We need to make sure we’re looking after them in the physical environment and supporting their mental health. For many employees, the home environment is beneficial but there are some for whom it’s more difficult.
“Moving home ground to a halt at the start of the pandemic but things are easing off and demand for mortgages has come back stronger than expected.”
Ms Robb mentioned that the drop in profits has not effected customers but the low 0.1 base rates have been a double-edged sword.
She added: “We’ve passed a lot of that benefit on to our mortgage customers but on the other side, it’s less good news for our savers and we had to reduce our savings rates.”