The UK’s biggest building society is set to hand £340m back to millions of its customers, after enjoying record profits of £2.2bn.
Announcing the move, Nationwide said it plans to hand its customers annual distributions going forwards, subject to the financial strength of the business each year.
The building society’s members – of whom there are 16.3 million worldwide – will be told on Friday if they are eligible to receive the cash payment in June, equivalent to £100 for millions of members.
Alongside the payments set to be made under Nationwide’s new “Fairer Share” scheme, the financial institution is also offering all members a Fairer Sharer Bond, paying a rate of 4.75 per cent.
“The fact that we’re building society, not a bank, means our profit is used for the benefit of our members,” said chief executive Debbie Crosbie, who joined the firm from TSB last June. “That’s why we have introduced ‘Fairer Share’, which will see us return even more value back to our members.”
Under its cooperative model, all Nationwide customers with a current account, mortgage or savings account are regarded as members, and those eligible for the June payment will have a Nationwide current account, along with a savings account or a mortgage.
The building society is the second-largest mortgage lender in the UK, and claimed to provide loans for one in seven first-time buyers last year as it announced record underlying profits of £1.6bn.
Those financial results, Nationwide’s strongest to date, were more than double those seen the previous year and were recorded during surging mortgage demand and house price inflation, alongside higher interest rates, now at a 15-year high.
Just days ago, however, Nationwide’s chief economist Robert Gardner announced “tentative signs of a recovery” after house prices rose by 0.5 per cent in April after falling for seven straight months.
But he pointed to Bank of England data suggesting that “housing market activity remained subdued” in early 2023, with the number of mortgages approved for house purchase in February nearly 40 per cent below the level prevailing a year ago, and around a third lower than pre-pandemic levels.
Announcing just shy of £1bn underlying profits in the first six months of the financial year, Nationwide said in November that it had shored up its budget for potential losses from customers defaulting on repayments due to “a deterioration in the economic outlook”.
The building society set aside £108m for credit losses, compared to the £34m it released the previous year.
