Financial performance
* Underlying profit before tax up 20.1% to £306.0m (30 September 2005 - underlying £254.8m)
* Record reported profit before tax up 32.1% to £336.4m (30 September 2005 - £254.7m)
* Total assets up 7.5% to £129.6bn (4 April 2006 - £120.6bn)
* Underlying ratio of costs to income down 1.9% to 58.7% (4 April 2006 - 60.6%)
* Net interest margin up 5bps to 1.11% (4 April 2006 - 1.06%)
Member value
* Members have benefited by around £280m through competitive interest rates and lower fees and charges. In addition to this, profits of £233.4m have been retained for future growth and investment
* Nationwide appeared in best buy tables 1,075 times between April and September 2006 across all products
* The Society has refurbished and re-sited over 220 branches and 100 agencies (over a third of the retail network) since the establishment of its investment programme to improve access to its services
for members. The additional sales space created is equivalent to that from an extra 83 branches.
* As a result of the recently announced plans to merge with the Portman Building Society, 13 million people will be members of a bigger society, offering market leading products and pricing, underpinned by a strong commitment to mutuality. The proposed merger will provide members with a larger network of branches and agencies, improving access to products and services.
Philip Williamson, Nationwide's chief executive, said: "It has been an outstanding first half to this financial year. We have delivered substantial benefits to members and our profits are higher than ever before. We are providing consumers with a real alternative to the banks. Our reputation for providing great value products and services has been underlined by the fact that we have appeared in best-buy tables on no less than 1,075 occasions in the half-year.
"In a competitive mortgage market, we have achieved very high levels of lending with gross residential lending of £14.5bn, up 34% on the corresponding period last year. Developments such as our online mortgage application facility will help us maintain momentum in residential mortgage lending. Commercial lending has performed particularly strongly, increasing by 67% to £3.6bn. We have achieved this growth while maintaining our focus on quality business.
"In the UK retail savings market we have once again proved to be a very popular choice for savers. We have continued to see a very high level of current account openings - more than
1 in 10 of all new current accounts opened in the UK are with Nationwide. Our share of the credit card market has also increased.
"We continue to invest heavily in upgrading our branches and have recruited an extra 350 people into our branch network and UK call centres.
"This is my last results announcement as chief executive before handing over the reins to Graham Beale. Nationwide, as a thriving mutual business, is in superb shape. We are extremely well placed to
meet the challenges ahead. These are exciting times for the Society, particularly as we prepare for the forthcoming merger with the Portman, and I have no doubt that our members will continue to
prosper under the new management team."
Operating highlights
* Lending and banking activities
Residential mortgages
* Nationwide is the UK's fourth largest mortgage lender
* High quality residential gross lending up 34% to £14.5bn (30 September 2005 - £10.8bn)
* Net lending up almost 50% to £5.9bn (30 September 2005 - £4.0bn)
* Number of mortgage sales up 17% on the same period in 2005/6
* The Society introduced an online mortgage application facility allowing customers to choose their product, reserve the deal and complete their mortgage application over the internet
* Nationwide appeared in mortgage best buy tables 272 times between April and September 2006
* Nationwide's three month + arrears cases are less than one third of the industry average (0.25% compared to 0.90%, CML - September 2006)
* Average loan-to-value (LTV) of new lending 59% (4 April 2006 - 55%) and seasoned book 39% (4 April 2006 - 39%)
* Commercial lending
* Commercial gross lending up 67% to a record £3.6bn (30 September 2005 - £2.2bn)
* Record net lending up 221% to £1.8bn (30 September 2005 - £0.6bn)
* Number of loans three months or more in arrears 63 (4 April 2006 - 69), the lowest level in 10 years
* Banking products
* Total current accounts up 8% to 3,936,000 (4 April 2006 - 3,644,000)
* Total credit cards in issue up 10% to 1,346,000 (4 April 2006 - 1,222,000)
* Nationwide appeared in banking products best buy tables 383 times between April and September 2006
* Unsecured lending
* Net loans broadly unchanged at £1.8bn (4 April 2006 - £1.7bn)
* Cautious approach to new lending in a market where credit losses continue to increase
* Share of loans 30 days or more in arrears is 5.4% - 34% below industry average (Finance and Leasing Association - September 2006)
* Retail savings
* Nationwide is the UK's second largest savings provider
* Retail savings deposits grew to £84.1bn, a 4% increase on 4 April 2006
* e-savings balances up 7% to £14.6bn. Number of accounts now exceeds one million
* ISA cash balances up 8% to £21.5bn
* New three-year loyalty fixed-rate bond launched in August 2006 to reward long-term members
* Nationwide appeared in savings best buy tables 106 times between April and September 2006
* Insurance
* General insurance new covers up 21% to 258,000 (30 September 2005 - 214,000)
* New household insurance product introduced July 2006
* Insurance income up 16% to £50.4m (30 September 2005 - £43.4m)
* Life and investment products in force up 4% to 953,000 (4 April 2006 - 915,000)
* Re-launch of life insurance protection product in May 2006
* Number of life insurance sales up 14% from the same period in 2005/6
* Balance sheet growth
* Nationwide is the world's largest building society with total assets of £129.6bn, up 7.5% from 4 April 2006
- risk weighted assets grew by 7.2% from 4 April 2006 to £68.2bn
* Reserves up 3.5% to £5.2bn and total regulatory capital up 2.5 % to £7.2bn from 4 April 2006
- tier 1 capital ratio 8.5% (4 April 2006 - 8.8%)
- total capital ratio 10.5% (4 April 2006 - 11.0%)
