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Nationwide Profits Fall By 46%

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I thought more people were putting their savings with them? They are giving little return on savings and are pulling in the mortgage rates so how come they almost half their profits?

http://www.walesonline.co.uk/business-in-wales/business-news/2010/05/26/nationwide-profits-fall-by-46-91466-26524648/

Nationwide Building Society reported a 46% fall in annual profits today and warned that historic low interest rates would hit profits over the year ahead.

The UK’s biggest building society posted underlying pre-tax profits of £212 million in the year to April 4, down on the £393 million a year earlier.

Nationwide said it was taking tough action on costs to help limit profit declines, including possible cuts in its administration centre network.

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It's hard to compete with state owned, taxpayer subsidised banks...

Also savings are a liability for a bank, while loans and mortgages are an asset for them (less loans/mortgages = less profit).

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According to the article profits fell 69% the year before. -46% this year (assuming article is correct ) is not great. 8bn outflow in savings value shows the problems of these low rates. Whether they have the appetite to do the cost cutting I suppose is the difference between the mutual and plc.

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I thought more people were putting their savings with them? They are giving little return on savings and are pulling in the mortgage rates so how come they almost half their profits?

http://www.walesonline.co.uk/business-in-wales/business-news/2010/05/26/nationwide-profits-fall-by-46-91466-26524648/

Having a SVR of 2.5% with more and more customers going onto it probably isn't helping the bottom line.

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It's hard to compete with state owned, taxpayer subsidised banks...

Precisely

Well run bank/building society suffering because the traditional means of supporting this business model, sensible interest rates, has been slashed to support bankrupt, state-owned banks

What a mess

Yeah, I'm with the Nationwide :(

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According to the article profits fell 69% the year before. -46% this year (assuming article is correct ) is not great. 8bn outflow in savings value shows the problems of these low rates. Whether they have the appetite to do the cost cutting I suppose is the difference between the mutual and plc.

I think that was the year they had to cough up £250m in rescue funding, largely to bail out customers of their private-bank competitors via the FSCS.

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They lost 8 billion in savings? Did everyone buy a house?

It would appear so. That's enough for 50,000 houses. Multiply that by all the banks/building societies and you begin to see what has kept the housing market afloat.

People with cash are buying properties. One has to hope this has been a temporary fillip to the housing market given that, unlike BTL investors, there won't presumably be the pyramid style leveraging of equity - as this would require debt to be taken on. I assume that people who have enough cash in the bank to buy a house are not natural speculators.

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It would appear so. That's enough for 50,000 houses. Multiply that by all the banks/building societies and you begin to see what has kept the housing market afloat.

People with cash are buying properties. One has to hope this has been a temporary fillip to the housing market given that, unlike BTL investors, there won't presumably be the pyramid style leveraging of equity - as this would require debt to be taken on. I assume that people who have enough cash in the bank to buy a house are not natural speculators.

They had massive inflow of savers at the start of the crisis because they were a well run institution. Then the government nationialised and guaranteed the big boys, and Nationwide's rates didn't look too appealing anymore given the risk-free returns at the state banks.

While I am sure some people are spending their savings in property, can you provide any evidence whatsoever regarding the number of cash purchases last year, or are you just talking out of your Rolf?

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Having a SVR of 2.5% with more and more customers going onto it probably isn't helping the bottom line.

Their 'SMR' (Standard Mortgage Rate?) seems to be 3.99% at the moment.

They pay about 2.6% on their Champion Saver account - which is a pass book, branch based, 60 day notice account which, I imagine, a lot of their previous 'e-savers' have moved their money into.

So, low interest rates apart, they get paid by borrowers about 53% more than they pay out to savers. You'd think this would be a licence to print money - even allowing for the fact they don't lend out the full amount deposited.

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They had massive inflow of savers at the start of the crisis because they were a well run institution. Then the government nationialised and guaranteed the big boys, and Nationwide's rates didn't look too appealing anymore given the risk-free returns at the state banks.

While I am sure some people are spending their savings in property, can you provide any evidence whatsoever regarding the number of cash purchases last year, or are you just talking out of your Rolf?

I can't be arsed to work out the evidence re cash purchases.

I just look at the facts that are easy to ascertain - low transaction volumes, low mortgage figures, high deposits required from FTBs - mix it in with anecdotal evidence from a few estate agents I know that use my software and realise that a considerable number of purchases today are cash purchases.

Where I live a typical 4 bed detached is 400k - 500k - they have been 'flying off the shelves' over the last year yet flats and other FTB/BTL stuff has been sticking. I can only conclude that people with cash are choosing to spend it on property and are avoiding the bottom end of the market.

I work from home and tend to look at a bit of property porn when having a break, and I've lost count of the number of people on Homes Under the Hammer (recently filmed episodes) who have ventured into property 'development' citing as their reason 'the money was earning nothing in the bank'.

Face it, it's a significant phenomenon and the only hope is that the money runs out one of these days.

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It would appear so. That's enough for 50,000 houses. Multiply that by all the banks/building societies and you begin to see what has kept the housing market afloat.

People with cash are buying properties. One has to hope this has been a temporary fillip to the housing market given that, unlike BTL investors, there won't presumably be the pyramid style leveraging of equity - as this would require debt to be taken on. I assume that people who have enough cash in the bank to buy a house are not natural speculators.

These buyers with high deposits may be saving the banks. They will be the buffer, "absorbing" the HPC - without getting into (too much) negative equity.

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I can't be arsed to work out the evidence re cash purchases.

I just look at the facts that are easy to ascertain - low transaction volumes, low mortgage figures, high deposits required from FTBs - mix it in with anecdotal evidence from a few estate agents I know that use my software and realise that a considerable number of purchases today are cash purchases.

Where I live a typical 4 bed detached is 400k - 500k - they have been 'flying off the shelves' over the last year yet flats and other FTB/BTL stuff has been sticking. I can only conclude that people with cash are choosing to spend it on property and are avoiding the bottom end of the market.

I work from home and tend to look at a bit of property porn when having a break, and I've lost count of the number of people on Homes Under the Hammer (recently filmed episodes) who have ventured into property 'development' citing as their reason 'the money was earning nothing in the bank'.

Face it, it's a significant phenomenon and the only hope is that the money runs out one of these days.

Thought so... talking out of your Rolf.

If the volume of cash purchases was anything even remotely close you the levels you are suggesting, net mortgage lending would be several billions in the negative every month.

Easy to ascertain figures. It's not that you can't be bothered, it's just that you have made your mind up.

Face it, the significant phenomena is the debt and it's not getting paid off.

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Their 'SMR' (Standard Mortgage Rate?) seems to be 3.99% at the moment.

Mortgage deals taken out until some point last year would have fallen back to the SVR which is maximum of BOE + 2%, new mortgages taken out since then fall back on to the rate you mentioned. Know plenty of people very happy to sit with their nationwide SVR rate..

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  • 150 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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