The UK’s largest building society will return £340m to millions of its customers after posting record £2.2bn profit.
Nationwide announced the move, stating that the company plans to pay its customers annual dividends in the future based on the company’s financial strength.
Members of the building society – there are 16.3 million worldwide – will be told on Friday whether they are eligible for the June cash payment, which is equivalent to £100 for million members.
In addition to payments to be made under Nationwide’s new “Fairer Share” program, the financial institution is also offering all members a Fair Sharer Bond with an interest rate of 4.75 percent.
“The fact that we are a building society and not a bank means our profits go to benefit our members,” said Managing Director Debbie Crosbie, who joined the firm from TSB last June. “That’s why we introduced ‘Fairer Share’, which allows us to give even more value back to our members.”
Under the co-op model, all Nationwide customers with a checking, mortgage, or savings account are considered members, and those eligible for the June payment have a Nationwide checking, savings, or mortgage account.
The building society is the second largest mortgage lender in the UK and said it provided credit to one in seven first-time buyers last year while announcing record profits of £1.6 billion.
These financial results, Nationwide’s best ever, were more than double the prior year and came amid rising mortgage demand and home price inflation and higher interest rates, which are now reaching 15-year highs.
Just days ago, however, Nationwide’s chief economist Robert Gardner announced “tentative signs of recovery” after home prices rose 0.5 percent in April after falling for seven straight months.
However, he cited data from the Bank of England which suggests that “property market activity remained subdued in early 2023”, with the number of mortgages approved for home purchases in February being almost 40 per cent down on the year and about a third down was lower than a year ago pre-pandemic levels.
Nationwide reported underlying profits of just under £1billion for the first six months of the financial year and announced in November that the company had covered its budget for potential losses from customers defaulting on their repayments due to “a deteriorating economic outlook”. default.
The building society has set aside £108m for loan losses, compared with £34m it released last year.