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Nationwide preliminary results for year ending 4 April

ended 19. May 2023

Nationwide has just published its preliminary results for the year ending 4 April. You can see the full report >> here <<. Any thoughts, whizz them across ASAP as this story is BREAKING. Some key points below:

  • Total gross mortgage lending reduced by £2.9bn to £33.6bn (2022: £36.5bn), with net lending of £3.3bn (2022: £7.1bn). Market share of balances was 12.2% (2022: 12.4%) in a highly competitive market
  • Credit impairment charges are higher at £126m (2022: release of £27m). However, the credit quality of our lending portfolios remains strong with low levels of arrears
  • The economic outlook remains highly uncertain, with continued increases in the cost of living and higher interest rates for borrowers putting further pressure on household finances and restraining consumer confidence. This has led to reduced mortgage market activity and lower house prices which are expected to remain subdued in the second half of 2023
  •  A deterioration in the economic outlook during the period, with expected future increases in arrears due to affordability pressures, is fully reflected in the economic scenarios used within our credit loss provisions. The credit quality of our lending portfolios remains strong with low current levels of arrears

3 responses from the Newspage community

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Editor
Samuel Mather-Holgate
Independent Financial Adviser at Mather and Murray Financial
Nationwide have always been a vanilla lender, looking for customers with whiter than white credit history. There is no surprise that their credit impairment chargers are low, but even Nationwide comment that they expect this to increase this year. Nationwide’s share of the pie remained similar to the previous year, but net lending was down nearly 10% showing an overall decline in confidence in the housing market that is unlikely to return until rates start getting slashed later this year. Overall, these results seem very positive for a lender that will be thankful of their policy to exclude those most vulnerable to economic shocks.
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Editor
Riz Malik
Independent Financial Adviser at R3 Wealth
It is notable that Nationwide seems to be well-positioned to navigate the economic meteor that is heading towards the UK. The relatively low loan-to-value (LTV) ratio of 55% on their residential portfolios provides a degree of resilience against minor fluctuations in property values. However, the growing credit impairment charge due to anticipated increases in arrears, linked to affordability issues, is a cause for concern.

Indeed, there's an economic storm on the horizon. As the rise in interest rates eventually affects a larger segment of the population - particularly when more individuals need to refinance their mortgages - financial stress could become more widespread. Nationwide, like its counterparts, seems to be preparing for these challenges ahead.
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Graham Cox
Director at Bridging Hub
Nationwide's preliminary results highlight how fundamentally the mortgage market has changed in the last year. Net lending is less than half what it was in the previous year, illustrating just how much demand has slowed as interest rates have risen. They also confirm house prices will remain 'subdued' throughout 2023, though whether that means they think prices will continue falling or flatline isn't clear. Personally, I think it's highly likely they'll fall due to high mortgage rates and the cost of living crisis.