Nationwide Building Society says “intense competition” hit its bottom line over the past financial year as it chose to put its members’ interests first.
The mutual said pre-tax profits in the 12 months to 4 April came in at £977m – a 7.3% fall on the previous year.
It marked the second consecutive annual decline and was driven by a sharp fall in net mortgage lending which tumbled to £5.8bn from £8.8bn in 2016/17.
Savings deposits also grew more slowly than in the previous year, by £3.5bn, though it pointed to 816,000 new current account openings and a record market share as evidence it was making progress.
Nationwide explained its decline in profits by saying it had chosen to ensure its rates were more competitive to benefit its members – to the tune of £560m in the current low interest rate environment.
It has greater flexibility on fees and mortgage and savings rates as it has no shareholders to reward unlike the major banks.
Chief financial officer, Mark Rennison, 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.”
The lender said it was looking to target more business from small firms.
It continued to predict a more robust economy than had been expected despite Brexit uncertainty but forecast house price growth would continue to slow to 1% this year.
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Chief executive Joe Garner said: “We anticipate modest growth in our core product markets, reflecting the outlook for the economy as a whole.
“With employment growth expected to slow and pressure on household budgets fading only gradually, mortgage lending is likely to rise at a fairly pedestrian pace.”