With an underlying profit of £212 million, the Nationwide Building Society, the largest of the mutuals, has seen a 46% drop in profits over the year.

The building society’s chief executive, Graham Beale, was upbeat over these figures though given the difficult trading environment. In a CityWire report he said the profit was ‘particularly pleasing’ given those conditions. And with their mortgage lending at £12 billion they have 8.7% of the market share.

The Nationwide he said has remained competitive in its core areas and its level of three months in arrears accounts was less than a third of the industry average of 2.33% at only 0.68%. This he sees as a testament to the company’s cautious lending approach.

The company have also performed well in the protection (insurance) and investment markets. Their protected equity bonds have been particularly popular going from £200 million invested to £1.2 billion in one year.

On the housing sector Mr Beale expects an overall flat market for the next year or so unless interest rates rise. The Nationwide expects more houses on the market and a continuation in restricted lending. There is also the prospect of a rise in arrears as public sector cuts and overall redundancies rise.

They also see some continued pain in the commercial property sector as weak tenant demand may go on for some time.

One of their more major concerns is how new banking regulations will affect the mutual societies. The mutuals have, they say, fared better and been “more resilient and less volatile” overall during the crisis, but they may find themselves swept up by the same regulation changes affecting their profitability.

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