Nationwide Building Society (NBS) H1 2025 earnings summary

Executive summary

• Achieved record H1 growth in mortgages and retail deposits, with net mortgage lending of £6.3bn and deposit growth of £8.3bn, increasing market share and customer satisfaction.

• Completed acquisition of Virgin Money, making the group the UK's second largest provider of mortgages and retail deposits, and resulting in a £2.3bn gain as net assets acquired exceeded the purchase price.

• Delivered over £1.3bn in value to members, including £950m Member Financial Benefit and £385m Fairer Share payment.

• Maintained strong cost discipline, robust asset quality, and No. 1 customer satisfaction in peer group for over 12 years.

• Expanded social impact initiatives, including the launch of a new strategy and partnerships with key charities.

Financial highlights

• Net interest income fell 11% year-over-year to £2,076m; underlying profit dropped 24% to £959m, and statutory profit fell 43% to £568m, mainly due to lower net interest margin and competitive pricing.

• Net interest margin declined to 1.50% from 1.66% year-over-year, but remained above full-year guidance.

• Record H1 mortgage net lending of £6.3bn and retail deposit growth of £8.3bn.

• Underlying costs rose 3.5% to £1,154m, including £26m one-off Virgin Money acquisition costs.

• Average deposit pay rate was 318 basis points, 74 basis points above market average.

Outlook and guidance

• Economic outlook remains uncertain, with expectations of having passed peak profitability and base rates expected to fall, impacting deposit margins.

• Mortgage market activity recovering, with approval volumes and house prices rising.

• Continued focus on cost discipline, aiming for underlying cost growth below 4%.

• Integration of Virgin Money will be gradual, with a full group financial update in May 2025.

• Base case scenario assumes rising unemployment and modest house price growth; weighted scenario indicates a 7% fall in house prices by early 2027.