Mark Rennison says Nationwide Profits Hit by Low Interest Rates

Statutory pre-tax profits for the year to March to £1.054bn, down 17% from last year's figure of £1.279bn.

However, Nationwide said 795,000 new current accounts had been opened in the six months to March.

That was a record for the society, it said, and more than any other provider in the UK.

The rise of 35% represented one in seven of all new accounts opened. It added that nearly one in five people switching their accounts became customers of the building society.

Chief financial officer Mark Rennison said: "Nationwide has delivered a very strong trading performance over the last year, with record levels of active members, mortgage lending and current account openings."

The Bank of England cut its benchmark interest rate to a record low of 0.25% last summer following the Brexit vote. Nationwide said it kept rates unchanged on some savings accounts while passing on the rate cut to its mortgage customers.

Mr Rennison said: "We chose to protect savers from the full effects of last summer's interest rate cut, knowing that this would reduce our full year profitability in the continuing low interest rate environment, but considering this to be in our members' best interests."

Branch network

Chief executive Joe Garner said the building society had seen "record use of online services driven by our mobile app" but added that branches continued to play an important part in the business.

He said that £80m was being invested in upgrading branches this year and added: "We still see a vital role for the branch network, despite the continued withdrawal of financial services providers from High Streets over the last two decades.

"We are exploring ways to ensure branches remain financially viable in a future where members may use them less. 

"Similarly, we're piloting a new community branch in Glastonbury, which opened in April, to test the viability of combining personal service and the latest technology to serve communities left without a bank."

Mr Garner also revealed that Nationwide will stop offering car insurance to new customers from next month, will wind down its commercial lending business and will stop offering inheritance planning advice.

"We believe it is not in the interests of our society to provide services which are not core to our business," he said.