Nationwide strengthens NIM as gross lending declines

Nationwide strengthens NIM as gross lending declines


The lender’s share of the mortgage market fell to 11.1 per cent, down from 11.4 per cent in the year ending April 2020.

Gross lending was £29.6bn, compared to £30.9bn the previous year.

Net interest margin (NIM) strengthened to 1.21 per cent, compared to 1.13 per cent the previous year, helped by “stronger new business margins across the market,” the lender said.

“In response to increased credit risk, mortgage margins increased across the market, which provides some protection against the elevated risk of further impairment losses,” it said.

Nationwide set aside £190m, down from £209m last year, for loans that may not be repaid in light of the uncertain economic outlook. However, arrears rates on lending portfolios remained low, “in part due to the impact of government support schemes on our borrowers’ finances and use of payment deferrals,” the mutual said.


Mortgage book quality

On the quality of the mortgage loan book, the lender said its proportion of residential mortgages more than three months in arrears was 0.43 per cent, up from 0.41 per cent year-on-year.

Meanwhile, the average indexed loan to value (LTV) was 56 per cent, tighter compared to 58 per cent the year before.

The society’s share of mortgage balances was 12.5 per cent, down from 12.9 per cent.

It provided 256,000 mortgage payment holidays during the year.

Impairment losses on residential lending were £71m, up from £53m last time.


Buy to let boost

Growth in buy-to-let (BTL) lending had helped to offset lower prime lending.

Total mortgage net lending was £1.9bn, including £3.6bn of buy-to-let.

Strong BTL mortgage lending resulted in BTL and legacy mortgage balances growing to £41.2bn, up from £37.6bn. Meanwhile, prime mortgage balances fell to £149.8bn, down from £151.1bn, “as we tightened our lending criteria,” the society said.

Total underlying income was £3.29bn this year, against £3.05bn last year.

The society’s underlying profit before tax jumped to £790m, against £469m — “reflecting strong income and a reduction in administrative expenses.”

Net deposit growth of £10.6bn reflected, “some members retaining higher balances during lockdown,” it said.

Joe Garner, chief executive at Nationwide Building Society (pictured), said: “We supported homebuyers by lending responsibly, including at 90 per cent loan-to-value (LTV), and more recently at 95 per cent LTV.”

The chief executive’s review added that the lender supported one in seven first-time buyers in the year, compared to one is six previously.

“We lent responsibly and, by tightening our lending criteria, were one of the first few lenders to offer 90 per cent LTV mortgages,” Garner said.

“Since the year end, the launch of our Helping Hand mortgage saw us become the first major lender to offer first-time buyers the ability to borrow 5.5 times salary on five or 10 year fixed rate mortgage, with LTV of up to nine per cent, enabling home ownership for many who have been frozen out. 

“In May 2021, we became the largest mortgage provider to reintroduce 95 per cent LTV lending, without government support, offering market-leading mortgages to first-time buyers and home-movers,” Garner said.