Nationwide says £300m tax bill will hurt lending

Britain's biggest customer-owned lender Nationwide said a new banking tax will cost the group £300 million (€421.8 million) over the next five years, affecting its ability to lend.

Nationwide, which is Britain’s second biggest provider of home loans, said that the cost was the equivalent of the capital required to fund £10 billion worth of lending.

Chief executive Graham Beale warned that the introduction of a new tax surcharge on bank profits from next year, announced by Britain's finance minister George Osborne last month, would have a disproportionate impact on building societies, which are smaller than major banks and focus on domestic lending.

“This represents a missed opportunity to support diversity by acknowledging that building societies are different to banks and to recognise the contribution Nationwide and other mutuals make by lending to the UK economy, and the housing market in particular,” Mr Beale said in a statement accompanying the lender’s quarterly results on Tuesday.

Nationwide reported a 52 per cent increase in first-quarter underlying profit to £400 million and a 50 per cent rise in statutory profit to £379 million.

It provided more than a quarter of total net lending to the British housing market during that period with gross mortgage lending rising by 17 per cent to £6.8 billion and net lending rising by 23.5 per cent to £2.1 billion.

Nationwide is targeting a 10 percent share of Britain’s personal current account market. Its market share remained unchanged at 6.8 per cent in its first quarter.

The group said its core tier 1 ratio, a key measure of its financial strength, rose by 1 percentage point to 20.8 per cent, higher than any British bank. Its leverage ratio strengthened by 10 basis points to 4.2 per cent.

Reuters