LONDON (Reuters) - Nationwide Building Society, one of Britain’s three biggest providers of mortgages, said on Friday its profit fell 6 percent as consumer spending and confidence fell following the country’s vote to leave the European Union.
The results represent one of the strongest indications yet from a major lender that the Brexit vote is having a significant impact on the British economy and consumer behaviour.
Nationwide posted a profit of 886 million pounds ($1.24 billion) for the nine months which ended on Dec. 31, down from 946 million a year earlier.
While the economy remained resilient immediately after the country’s June 2016 EU vote, there were signs of a slowdown in 2017, it said.
“Household spending, a key driver of growth, lost some momentum. Retail sales and car registrations have slowed and consumer confidence has also softened,” Chief Executive Joe Garner said.
Subdued economic activity and a squeeze on household budgets will continue to pressure house prices and profits, Nationwide said.
British house prices recorded modest growth last month, with expensive properties in London particularly struggling to sell, an industry survey showed on Thursday.
Nationwide said research with partners including debt advice charity Citizens Advice and retailer Marks & Spencer into consumer behaviour showed pressures on household budgets.
“We are seeing a lot of affordability pressure, not just unsecured lending but inflationary pressures coming through in a lot of ways...including pressure on rents,” Garner said.
Garner said that with around one in three people in Britain having little or no material savings, inflation is squeezing budgets and impacting consumer confidence.
Nationwide said its net interest margin, the gap between what it pays savers and what it charges borrowers, was steady at 1.33 percent but would likely fall this financial year and next.
The lender said it had brought onto its staff around 300 contractors who had worked in its offices for infrastructure firm Carillion,, which collapsed last month in Britain’s biggest corporate failure in a decade.
Nationwide reported its underlying profit, which measures management’s view of its underlying performance, rose to 883 million pounds from 866 million pounds a year ago.
Nationwide’s cost to income ratio rose to 59.6 percent from 57.6 percent on higher defined benefit pension costs.
($1 = 0.7160 pounds)
Reporting by Lawrence White; editing by Jason Neely and Alexander Smith