Friday, November 20, 2009

Nationwide BS results and latest house price forecast

Nationwide gives gloomy forecast to match profit slump

Nationwide Building Society has reported a big slump in profits and delivered a gloomy forecast for the UK economy and the housing market. Pre-tax profits for the six months to the end of September were £143m, down 62% on the £374m reported a year ago. The company blamed low interest rates and the "dramatic fall" in commercial property prices for the slump. It also said the recovery would be slow and rising unemployment would put downward pressure on house prices.

Posted by jack c @ 09:00 AM (1975 views)
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9 thoughts on “Nationwide BS results and latest house price forecast

  • HAHAHAHAHAH

    Some truth at last.

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  • I can’t see how low interest rates have caused any problems. I thought the banks wanted low rates so they could increase their margins and avoid a house price collapse. Still what do I know?

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  • Is it truth or more spin to place pressure on the BOE and the Government for more money printing – QE?

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  • What utter tosh! Profits are down because they are not selling properties! Not wanting to state the obvious but if EA slashed the prices of properties then everyone would be better off as they would sell more.

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  • cyril
    I really don’t think a low base rate implies a higher margin, I think that comes down to the amount of competition in the market.

    There could be collusion of course.

    There will also be a short term effect of effective collusion, but as soon as competition starts that extra margin gets squeezed out.

    As an example: If there is only one guy really willing to lend he can charge what he likes, hence why a loan shark can charge so much – no other lender will touch her customers ( until another loan shark realises he can charge less for the risk and goes into competition with her that is ).

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  • I guess the media have started to spin the idea that higher interest rates will now be the answer. Get ready.

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  • [email protected]

    I guess it depends on how much new business they have generated. They sent me a letter for the first time in the 12 years I’ve been with them telling me how flexible my mortgage was & how I could make early repayments. At 2.5% I’ll get better return putting money elsewhere for now.

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  • FT article on this Nationwide censures state-backed banks “Nationwide, the UK building society, on Friday accused government-backed companies of seriously distorting the UK retail savings market with “uneconomic pricing” of products.
    The comments came as the country’s second-largest savings provider reported drop of more than 60 per cent in underlying pre-tax profits to £117m as low interest rates hit margins and it raised credit impairment provisions.”

    Could just be trying to blame someone else for their poor performance. Although I tend to agree that their balance sheet would have been different if some of the zombie banks had not been bailed out. But has Nationwide itself benefited indirectly from the bailouts which stopped the hpc, at least for the time being?

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  • Cyril, the issue with low interest rates is that a large proportion of Nationwide’s mortgage holders are now on their SVR of only 2.5%. This has had a dramatic impact on their margins and the profitability of those customers

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