Nationwide Building Society said it has upped its bad debt provision by £101mln due to the potential impact of the coronavirus outbreak.
The additional provision reflects an increase in expected credit losses resulting from payment holidays and the economic outlook, said the mutual.
“In the medium-term the society will focus on maintaining its strong capital and liquidity position through the economic cycle, enabling us to continue to provide competitive products and excellent service for our members,” it added.
Profits in the year to 4 April tumbled by 44% to £466mln, it revealed, with results affected by higher PPI provisions, IT investment and a competitive mortgage market, as well as the COVID-19 issues.
March saw a material impact on its financial performance it added, with bank base rate reductions due to the impact of the virus and more uncertain economic environment.
The capital position at the end of the year was a UK leverage ratio of 4.7% (2019: 4.9%), which the society said was above its target of at least 4.5%.
Mortgage lending slowed over the year to £31bn, compared to £36bn, though this was intentional said the society.
Savings deposits rose by £5.7bn (2019: £6 billion), including £2.5bn growth in current account balances.
Nationwide has been under pressure from new digital-only competitors such as Monzo and Starling and opened 759,000 new current accounts against 794,000 in the previous year, with its share of main current accounts rising to 8.1%11 (8.0%) with a student and youth share of 16% (2019: 14%).
Published at Fri, 29 May 2020 09:58:00 +0000-Nationwide sets aside £101mln for coronavirus-related credit losses