Cheap Website Traffic

Nationwide braces for customers failing to repay loans after strong summer


The UK’s biggest building society Nationwide is bracing for customers to struggle to repay loans after putting aside £139m for bad debts due to the pandemic. 

The mutual, which has received more than 100,000 calls from members every month since the pandemic erupted in March, doubled its provision for loan losses from £57m a year ago.

Despite the uncertainties its pre-tax profits rose 17pc to £361m. 

The figures cover the six-month period from April to September, covering the summer and most of the first lockdown but meaning the impact from this latest lockdown is not included. Most banks reported a surprisingly strong third quarter, with the Bank of England’s chief economist Andy Haldane saying in late September that the economy had recovered “far faster” than anyone expected over the previous four months.

However the numbers have been cushioned by government support schemes, which remain in place and have so far kept bad debts down. Bank executives have been talking to Treasury officials for months about how to keep their reputation intact when those schemes are lifted and they have to start chasing debts. 

Even before a new lockdown was announced, lenders feared that the end of taxpayer-funded support schemes could create a legion of people unable to afford their mortgages, hurting house prices and resulting in bad loans piling up. 

Joe Garner, the chief executive of Nationwide, said it was very hard to predict what would happen to the economy, jobs and the housing market as a result of the pandemic and Brexit.

“Looking ahead, as and when government support winds down, it is clear that many more people are likely to lose their jobs and family finances will come under strain,” he said. 

Nationwide is a member-owned society, meaning it is not under the same pressure to deliver returns as rival big shareholder-owned banks.   

It has provided 246,000 mortgage payment holidays and has promised that no one will lose their home in the next 12 months because of the impact of coronavirus.

Its results come a day after it vowed not to close a branch in any town or city in the UK until at least 2023, bucking the wider trend in the industry as banks continue to shut branches across the country. 


Source link

Cheap Website Traffic