The building society announced profits of £977m for the 12 months to April 4, down from £1.05bn a year earlier.
Net mortgage lending over the period sank to £5.8bn from £8.8bn in 2016/17, while gross mortgage lending edged down to £33bn from £33.7bn, which is a market share of 12.8, down from 14%.
The lender said this was in line with its decision to reduce buy-to-let lending through The Mortgage Works, although it is currently trialling limited company landlord mortgages through the brand.
The mutual plans to launch a retirement interest-only mortgage, to give borrowers “more choice for managing their finances as they get older” and comes after the lender launched an equity release product.
Over the year, Nationwide helped one in five first-time buyers get on the ladder, equating to 76,000 people over the year.
Reflecting support for first-time buyers has increased the lender’s proportion of loan balances with an LTV greater than 80% to 11.2% from 9.6%.
Market to remain competitive
The lender predicted the housing market will remain subdued, and forecast house price growth to slow to just 1% over the next year.
It added that it expects the mortgage market to remain “extremely competitive”.
Nationwide also said that it will be reviewing its technology and digital operations over the coming months.
Mark Rennison, chief financial officer at Nationwide Building Society, said: “Nationwide continues to trade strongly in spite of intense competition in our core markets, in a number of cases choosing to protect value for members through more competitive pricing rather than taking the opportunity to enhance margin.”
He added: “We expect technology innovation to accelerate, driven by digital adoption, mobile service take-up and Open Banking.
“We are reviewing our operations and technology to ensure Nationwide can take the opportunities ahead and meet the challenges posed by increasing dependence on technology and growing cyber threats.
“We do so having achieved a position of financial strength, good trading performance and demonstrable cost discipline.
“We will update on these plans and the investment required later in the year.”
In the current account market, the mutual grew its market share to a record 7.9% for main standard and packaged accounts.
Business banking launch
Nationwide is now planning to move into business banking to offer a current account for small firms.
Joe Garner, chief executive, Nationwide Building Society, said: “Nationwide’s defining difference is that we’re owned by our members.
“This informs how we operate and the decisions we make.
“So we continue to focus on delivering what members tell us matters most – outstanding service and great value, backed by record capital strength.
“We believe Nationwide could transform choice for the UK’s small businesses in the way we have become top choice for personal current accounts.”