Nationwide Building Society (LON:NBS) reported what Chief Executive Debbie Crosbie called “another outstanding year,” citing record current account openings, market-leading growth in mortgages and retail deposits, and progress integrating Virgin Money following its acquisition.
Speaking on Nationwide’s annual results call for investors, Crosbie said the building society opened a record 1 million new personal current accounts during the year and attracted more current account switchers than any other brand for the sixth consecutive quarter. She said Nationwide’s net switcher gains were “more than four times higher than the rest of the market combined.”
Nationwide also said it returned £1.8 billion of value to members during the period, including through better rates and its Fairer Share payment. Crosbie announced that the company will make another £100 Fairer Share payment to eligible members in June.
Profit Rises as Enlarged Group Benefits Results
Chief Financial Officer Muir Mathieson said Nationwide delivered £2 billion in underlying profit, up 9% year over year. He said the increase reflected higher income, costs and impairments as the results included 12 months as an enlarged group following the Virgin Money acquisition, compared with six months in the prior year.
On a second-half comparison, Mathieson said underlying profit rose 17% from the same period a year earlier, after the acquisition had completed.
Mathieson said member value totaled £1.8 billion, comprising £400 million distributed through the Fairer Share payment announced in May 2025 and £1.4 billion in “member financial benefit,” which he said primarily reflected the difference between rates paid to Nationwide members and the market average.
Net interest margin increased by six basis points in the second half from the prior six months. Mathieson attributed the increase mainly to structural hedge benefits and the absence of Bank of England base rate cuts during the period, partly offset by lower new business margins on mortgages and customer deposits in a competitive market.
Looking ahead, Mathieson said Nationwide expects the headwind from competition and the tailwind from structural hedging to remain “broadly balanced” over the next six to 12 months, based on its assumption that the Bank of England base rate remains unchanged this year.
Mortgage and Deposit Growth Lead Core Performance
Crosbie said mortgage growth was supported by competitive pricing, changes to the company’s proposition, expansion into interest-only products, greater support for first-time buyers and higher income multiples. She also pointed to improvements in Nationwide’s digital mortgage process, including automated income verification, valuation tools that enable instant offers and API integration with brokers.
Mathieson said new mortgage completions were written at 55 basis points over swap rates, broadly unchanged from the prior six months. In response to an analyst question, he said Nationwide can still earn an economic return at roughly current levels or “a handful of basis points lower.” He said the current pipeline was around 60 basis points over swaps.
Nationwide also reported market-leading retail deposit growth. Mathieson said the average Nationwide member rate for retail deposits was 267 basis points, 58 basis points above the market average. He said competition in savings remained heightened, including from traditional high street banks, non-high street players and non-traditional entrants.
“We’re here to compete. We’re here to give that value back to our members,” Mathieson said, adding that Nationwide had announced a 5% member-exclusive bond.
Virgin Money Integration Moves Into Next Phase
Crosbie said Nationwide has made “great strides” integrating Virgin Money. She noted that the company completed the Part VII transfer of Virgin Money’s banking assets and liabilities into Nationwide Building Society in April, including the legal transfer of customers and colleagues as well as the migration of key back-office enterprise systems such as treasury and human resources.
Nationwide will begin migrating Virgin Money customers onto Nationwide-branded systems and processes later this year, Crosbie said. She said the company remains on track to launch a Nationwide-branded business banking proposition in 2027, combining Virgin Money’s business banking experience with Nationwide’s mutual model.
Mathieson said integration costs totaled £127 million during the year, tied to the Part VII transfer and preparation for customer migration activity. He said integration spending is expected to peak over the next 12 months as customer system migrations begin, then decline. He also said total integration spend is tracking below original expectations, while expected end-state synergies are above the original plan.
Business Banking and Technology Investment
Crosbie said Nationwide is building momentum in business banking, with more than 56,000 new business current account openings under the Virgin Money brand, which she described as a record year. Business deposits rose by £1.7 billion, and Mathieson said business deposit growth was ahead of the market.
In the question-and-answer portion of the call, Crosbie said business banking represents a “huge opportunity” for Nationwide. She said the company currently has only 2% to 3% of the business banking market, compared with more than 16% of the mortgage market. However, Mathieson said business lending declined marginally year over year due to specific redemptions and Nationwide’s decision not to participate in lending where margins and criteria did not meet its appetite.
Crosbie also highlighted technology investments, including the migration of 18 million customer accounts to a modernized SAP platform and an “industry first” migration of payments processing to a dual cloud platform. She said Nationwide is using artificial intelligence to support customer-facing colleagues with real-time insights, call summarization and personalization, while keeping “a human in the loop.”
She said more than 2,000 engineers are using AI for coding, and AI is also supporting integration work, including data mapping and software generation.
Asset Quality and Capital Remain Robust
Mathieson said asset quality across Nationwide’s portfolios remained robust, with low and stable arrears. The net underlying impairment charge was £331 million, equal to an 11-basis-point cost of risk, which he said was in line with prior guidance and below the peer group average.
Mortgage arrears of three months or more fell slightly to 39 basis points, which Mathieson said was around half the industry average. The average loan-to-value ratio on new mortgage business was 72%, while the average stock loan-to-value ratio was 58%.
Nationwide reported a 12-month average liquidity coverage ratio of 169%, compared with 174% at the end of the prior year. On-balance-sheet liquidity totaled £59 billion, with around £120 billion of estimated drawdown capacity at the central bank.
Capital ratios remained stable, with a common equity tier 1 ratio of 19.1% and a leverage ratio of 5.3%. Mathieson said Nationwide is “not in a rush to take down capital ratios,” noting that as a mutual it is not under the same pressure as shareholder-owned banks to distribute excess capital.
Crosbie closed the call by saying Nationwide remains focused on member value and service. “We’re delighted. We’re not complacent,” she said.
About Nationwide Building Society (LON:NBS)
Nationwide Building Society, together with its subsidiaries, provides retail financial services in the United Kingdom. The company offers current, savings, and individual savings accounts; residential mortgages; overdrafts, personal loans, car loans, and home improvement loans; and credit cards. It also provides loans to registered social landlords, loans made under the private finance initiatives, and commercial real estate loans. In addition, the company offers home, life, income protection, travel, mobile phone, and breakdown insurance; and investment products and services, such as financial planning services.
