Nationwide Building Society · LSE:NBS
Nationwide Building Society — Q2 2024 Earnings Presentation
30 slides from Nationwide Building Society's earnings presentation, Nov 17, 2023
Slide 1: Interim Results Presentation
Interim Results Presentation For the six months ended 30 September 2023
Slide 2: Interim performance highlights
Interim performance highlights £1,262 million £989 million 27.4 % 6.4 % underlying profit statutory profit CET1 ratio leverage ratio H1 2022/23: £980 million H1 2022/23: £969 million 4 April 2023: 26.5% 4 April 2023: 6.0% £885 million £344 million Branch 1st member financial distributed to our membe
Slide 3: Driving value through customers' channel of choice
Driving value through customers’ channel of choice Value creation from branch network Multi-channel users are our most Delivering digital change and service is increasing engaged customers innovation 23% of savings accounts opened in Hold more products, 15% more Engagement growing with mobile app br
Slide 4: Financial update
Financial update Chris Rhodes, Chief Finance Officer 4
Slide 5: Net interest income growth led to an increase in underlying profit
Net interest income growth led to an increase in underlying profit £million H1 23/24 H1 22/23 % change • Net interest income increased by £282m supported by the benefit arising from increases in base rate partly offset by a Net interest income 2,337 2,055 14% decline in mortgage net interest income.
Slide 6: We maintain a low risk, strongly capitalised balance sheet
We maintain a low risk, strongly capitalised balance sheet £million 30 Sep 23 04 Apr 23 % change • Residential mortgage growth of £0.6bn as we maintained our Residential mortgages 202.0 201.4 0.3% market share of balances in a competitive environment. Retail unsecured 3.9 3.9 - • Retail deposit bala
Slide 7: Net interest margin supported by deposit margins partially offset by mortgage pressures
Net interest margin supported by deposit margins partially offset by mortgage pressures Net interest margin movements, H1 22/23 through to H1 23/24, % 2 2 1 1 Net interest income, £bn & net interest margin, % 3.0 1.66% 1.66% 1.80% 1.48% 1.60% • Net interest margin increased to 1.66% compared to 2.5
Slide 8: Retail mortgages performance
Retail mortgages performance Mortgage balances by product type, £bn • Retail mortgage balances were £202bn at the £191bn £191bn £194bn £198bn £204bn £202bn £202bn end of the period, reflecting a slowdown in 20% 19% 17% 15% 13% 11% 11% housing market activity. Market share was maintained at 12.2%. 83
Slide 9: Retail deposits performance
Retail deposits performance Retail deposit mix, % Average deposit rates (annualised), % £181bn £187bn £191bn 6% • Retail deposit balances increased by 20% 17% 17% 5% £4.2bn in the period, supported by 12% 20% 27% competitive pricing and increased 4% 2.92% levels of accrued interest from higher 3% av
Slide 10: Cost increases mitigated despite the inflationary backdrop
Cost increases mitigated despite the inflationary backdrop £million H1 23/24 H1 22/23 YoY change • Total costs were 3% higher compared to H1 2022/23. Business as usual 748 691 57 ↑ • Costs excluding restructuring were £64m (6%) higher, as inflationary increases within BAU Investment & depreciation 3
Slide 11: Stable credit performance amidst continued economic uncertainty
Stable credit performance amidst continued economic uncertainty Residential Unsecured Evolution of Loan Book (%, LHS) and Cost of Risk (bps, RHS) Retail lending 30 Sep 23 04 Apr 23 30 Sep 23 04 Apr 23 100 50 Total balances (£m) 202,275 201,662 4,317 4,408 95 40 Provision balances 30 (£m) 305 280 450
Slide 12: Mortgage portfolio refinancing profile
Mortgage portfolio refinancing profile Fixed rate maturities, owner-occupied portfolio, £bn £12bn 10% • Whilst existing borrowers are facing into higher pay rates at £10bn 8% the maturity of existing deals, over a quarter of the fixed rate book is either new lending or has refinanced since £8bn 6% S
Slide 13: Liquidity analysis
Liquidity analysis LCR Pillar 1 %, 12m rolling average1 Liquid assets, £bn 220% 60 £50bn £53bn • The 12-month average LCR was 191% (4 April 200% 191% 50 2023: 180%). Our internal assessment of liquidity explicitly considers characteristics of 180% 40 Nationwide’s deposit book, including the level of
Slide 14: Robust wholesale funding position supported by strong credit ratings
Robust wholesale funding position supported by strong credit ratings Wholesale funding issuance, £bn: FY to date1 Wholesale funding portfolio by instrument1, % 2.8 4.0 • We have repaid £8.6bn of TFSME ahead of contractual maturity, leaving £13.1bn of drawings 0.2 25% 1.0 31% outstanding. 0.1 2% 0.8
Slide 15: We meet current and expected regulatory capital requirements
We meet current and expected regulatory capital requirements Risk-weighted capital Leverage ratio MREL (% of RWAs) (% of leverage exposure) (% of leverage exposure) • Capital surpluses ensure we maintain buffers above minimum regulatory capital requirements across risk based, leverage £17.4bn £9.4bn
Slide 16: Nationwide
“ nationwide
Slide 17: Appendix
Appendix 17
Slide 18: Multiple economic scenarios
Multiple economic scenarios Scenario & weighting Variable (%) 2023 2024 2025 5-year Peak² Trough2 Unemployment rate, % average¹ 10 GDP growth 1.0 1.6 1.6 1.5 7.6 0.1 9 Upside 10% Base rate 5.3 4.0 4.0 4.3 5.3 4.0 8 (4 April 2023: 10%) HPI growth (0.7) 3.7 3.8 2.8 15.1 (2.7) 7 Unemployment rate 4.2 4
Slide 19: IFRS 9 staging and provisioning by portfolio
IFRS 9 staging and provisioning by portfolio Owner-occupied mortgages¹ But-to-let & legacy mortgages Unsecured 30 Sep 23 04 Apr 23 30 Sep 23 04 Apr 23 30 Sep 23 04 Apr 23 Provision Provision Provision Provision Provision Provision Balance Balance Balance Balance Balance Balance coverage coverage cov
Slide 20: LTV distribution of residential mortgage portfolios
LTV distribution of residential mortgage portfolios Loan book balances (by value): 30 September 2023 New business1 (by value): H1 2023/24 Owner-occupied BTL & legacy Total Owner-occupied BTL & legacy Total LTV band % % % LTV band % % % £bn £bn £bn £bn £bn £bn total total total total total total <50%
Slide 21: Structural hedge and NII/EVE sensitivity analysis
Structural hedge and NII/EVE sensitivity analysis Structural hedging programme Structural hedge 50 1.60% • We undertake structural hedging of our CCDS, reserves and stable1 1.40% personal current account balances to smooth income volatility from 40 short-term changes in interest rates. 1.20% 30 1.00
Slide 22: We remain active in core wholesale term funding markets
We remain active in core wholesale term funding markets Public wholesale issuance by trade, financial year to date1 Instrument Tenor Currency Notional (CCY) Trade date Senior preferred 2yr EUR 500m May 2023 Covered bond 5yr GBP 750m June 2023 Senior non-preferred 4NC3 CHF 175m August 2023 Senior pre
Slide 23: Nationwide continues to perform strongly in Bank of England stress test
Nationwide continues to perform strongly in Bank of England stress test CET1 drawdown and low-point post management actions, % • As a D-SIB, Nationwide is subject to the 25.0 Bank of England’s stress testing regime. 4.2 20.0 • The 2022/23 Annual Cyclical Scenario 15.0 (ACS) assumes a significant eco
Slide 24: Responsible Business
Responsible Business 24
Slide 25: ESG ratings remain strong
ESG ratings remain strong ESG Assessment Score Scale Date stamp Moody’s Analytics ESG Assessment 62 0 to 100 July 2023 ESG Rating ISS ESG Rating C+, Prime A+ to D- September 2023 CDP Climate Change AAA A- A to D- December 2022 Disclosure S&P ESG Score 54 0 to 100 May 2023 Leader We’re also rated by
Slide 26: Nationwide is a responsible business
Nationwide is a responsible business Beacon for mutual Having a meaningful impact on customers, communities and society, by being bigger and doing better good By 2025, we will help 250,000 people to buy their first home1 Reducing our Our Mutual Good By 2025, we will have provided £1 billion of new e
Slide 27: We have disclosed our emissions and science-based targets
We have disclosed our emissions and science-based targets Scope 1 & 2 emissions Upstream scope 3 emissions (categories 1, 2 & 4) 2,361 & 12,774 † (c.0.5%) 42% absolute emissions reduction target for Scope 1; 156,000 (c.5%) continue to source 100% renewable electricity for scope 2 | full control • Na
Slide 28: Approach for reducing Scope 3 mortgage emissions
Approach for reducing Scope 3 mortgage emissions Modelled impact of key carbon reducing activities on our scope 3 mortgage emissions † c. 80% of emissions are attributable to our residential mortgage lending. Reducing these emissions requires changes to policy and consumer behaviour. We are taking a
Slide 29: Contact information
Contact information Investor Relations nationwide.treasury@nationwide.co.uk mailbox Investor Relations www.nationwide.co.uk/investor-relations website Sarah Abercrombie sarah.abercrombie@nationwide.co.uk Head of Investor Relations, Credit Ratings & Treasury Sustainability Vikas Sidhu vikas.sidhu@nat
Slide 30: Disclaimer
Disclaimer This presentation has been prepared by and is the property of Nationwide Building Society (“Nationwide”). By attending this presentation or accepting this document you represent, warrant and agree that (i) you will not reproduce or transmit the contents (in whole or in part) of this prese
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