By Iain Withers
LONDON (Reuters) -British lender Nationwide will pay out 340 million pounds ($429 million) to some customers through 100 pound payments to their current accounts, it said on Friday after reporting a 40% leap in annual profit driven by a run of Bank of England rate hikes.
The country’s largest building society said it would make the payments to 3.4 million eligible customers next month, adding that this will be its first such distribution and that the society aims to repeat this in future years.
Like rivals, Nationwide’s income from lending leapt off the back of 12 straight Bank of England rate rises, but it warned high inflation and an economic slowdown could still hit its finances.
The payment to customers’ current accounts is an unusual move for a British lender, with companies typically returning cash to investors after annual results.
Nationwide Chief Executive Officer Debbie Crosbie said the move was possible because the lender was a building society owned by customers.
“We don’t see anyone else doing this… in the cost of living crisis, it was really important to give people cash where we could,” Crosbie told reporters.
Customers will qualify for the payment automatically if they have a current account with Nationwide and one other product such as a savings account or mortgage with a balance of at least 100 pounds, Crosbie said.
The giant mortgage lender also forecast house prices would fall 4.5% this year and drop 12% by the end of 2024, adding activity was expected to remain subdued for the rest of the year.
Nationwide reported pre-tax profit of 2.2 billion pounds for the year to April 4, up from 1.6 billion pounds the prior year.
But it warned more customers could fall behind on loan repayments and it set aside 126 million pounds to cover possible soured loans, compared with the release of 27 million pounds of reserves the previous year.
($1 = 0.7923 pounds)
(Reporting by Iain Withers;Editing by Jason Neely, David Goodman and Emelia Sithole-Matarise)
