Markets News

UPDATE 1-UK's Nationwide profit holds up despite pandemic hit

(Adds detail, comments)

LONDON, Nov 20 (Reuters) - Nationwide Building Society reported robust half-year profits on Friday despite a hit from a provision to cover likely unpaid loans due to coronavirus and losing ground to rivals in Britain’s buoyant mortgage market.

The lender reported a pretax profit of 361 million pounds ($478.47 million) for the six months to September, up 17% from 309 million pounds the previous year.

The bellwether mortgage lender - Britain’s second-largest provider of home loans - said it was boosted by strong demand for buy-to-let mortgages, although its net lending over the period dropped to 1.6 billion pounds from 3 billion a year earlier.

In contrast to its larger rival Lloyds - which gained market share over the summer amid a coronavirus-driven boom in people moving homes - Nationwide’s share of net lending over its reporting period fell to 5.2%, down from 9.6% the previous year. Its market share of gross lending fell to 12% from 12.3%.

“What we’ve focused on is lending into certain areas that our really core to our purposes such as first-time buyers,” CEO Joe Garner told reporters. “We’ve been quite targeted in our lending. We don’t do market share for market share’s sake.”

Chief Financial Officer Chris Rhodes said the lender also lost ground due to a focus on home purchases - which were worst hit in the early months of the pandemic - ahead of remortgaging and cited operational challenges in the lockdown.

The lender booked a 139 million pound provision for loans that may not be repaid due to the pandemic.

The results covered the bulk of Britain’s first lockdown and the reopening of much of the economy over the summer, but did not capture the impact of more recent economic and social restrictions.

Rhodes said the group’s forecasting also did not take account of encouraging vaccine news in recent weeks as this came after the period.

Sara Bennison, the lender’s chief product and marketing officer, said government support packages had limited the impact of the pandemic on customers.

Only 15,000 of the 246,000 Nationwide customers given mortgage payment holidays have needed further support beyond six months, Rhodes said.

Reporting by Iain Withers; editing by Rachel Armstrong and Jason Neely