Nationwide Building Society · LSE:NBS
Nationwide Building Society — H1 2017/18 Earnings Presentation
26 slides from Nationwide Building Society's earnings presentation, November 2017
Slide 1: Half Year Results Presentation
Half Year Results Presentation For the half year ended 30 September 2017
Slide 2: Highlights
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Slide 3: Delivering Strong Profits and Enhancing Financial Strength
DELIVERING STRONG PROFITS AND ENHANCING FINANCIAL STRENGTH Profit on track to remain comfortably within strategic targets Capital ratios at an all time high £615m £588m 29.6% 25.4% Apr 17 Sep 17 CET1 Ratio 4.9% 4.4% H1 16/17 H1 17/18 Apr 17 Sep 17 Underlying Profit Before Tax UK Leverage Ratio One-o
Slide 4: Record Number of People Choosing Nationwide
RECORD NUMBER OF PEOPLE CHOOSING NATIONWIDE Continued record current account growth Prime mortgage lending hits £15bn Held deposit market share around 10% 417 427 £14.7bn £14.5bn £15.0bn 10.2% 10.1% 10.1% 377 £13.5bn 10.1% 10.0% 314 £12.0bn 277 H1 15/16 H2 15/16 H1 16/17 H2 16/17 H1 17/18 H1 15/16 H
Slide 5: Demonstrating Mutual Value; Rewarding Members with £245m
DEMONSTRATING MUTUAL VALUE; REWARDING MEMBERS WITH £245M Sustained member financial benefit in competitive market Highest customer satisfaction amongst high street peer group¹ Nationwide Peer group average £250m £245m 80% 90% Other £65m £65m 80% 70% 70% Savings £185m £180m 60% 60% 50% 50% H1 16/17 H
Slide 6: Strategy
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Slide 7: Our Commitment to Our Members
OUR COMMITMENT TO OUR MEMBERS Cornerstone Measure Performance Target Underlying profit before tax On target £0.9bn - £1.3bn p.a. Built to last UK leverage ratio 4.9% >4% Employee engagement and Above cross industry high Building PRIDE enablement No change performance benchmark Building legendary Ser
Slide 8: Financials
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Slide 9: Balancing Profits in Line with Members' Interests
BALANCING PROFITS IN LINE WITH MEMBERS’ INTERESTS H1 16/17 H1 17/18 % Change Balancing profits with our mutual values, in line £m £m with our financial performance framework and Underlying income 1,642 1,639 delivering £245m of member financial benefit. Containing cost growth, which is expected to b
Slide 10: Maintaining a Low Risk Balance Sheet
MAINTAINING A LOW RISK BALANCE SHEET 4 Apr 17 30 Sep 17 £bn £bn % Change Asset growth of 3% driven by growth in residential Residential mortgages 171.1 175.1 2% mortgage lending and prudent liquidity position. Strengthening capital ratios. Other lending 16.3 15.5 (4%) Liquidity¹ 25.4 29.1 15% Other
Slide 11: Stable Margin Performance, Despite Ongoing Mortgage Pressure
STABLE MARGIN PERFORMANCE, DESPITE ONGOING MORTGAGE PRESSURE Net Interest Margin (NIM) Evolution Movement in NIM Net interest margin Net interest income 1.47% 1.52% 1.27% 1.33% (6b p s) 1.02% 13b p s £2,872m £3,086m £2,960m (4b p s) £1,981m £2,431m (2b p s) 134bps 133bps FY 12/13 FY 13/14 FY 14/15 F
Slide 12: Delivering Cost Savings
DELIVERING COST SAVINGS Costs Costs have increased by 3% largely reflecting the impact of previous Efficiency investment strategic investment, as well as higher pension costs due to market conditions. 3% £12m This is offset by the progress made to £(36)m 967 date on achieving our targeted ambition £
Slide 13: Impairment Charges Remain at Low Levels
IMPAIRMENT CHARGES REMAIN AT LOW LEVELS Impairments Retail Lending Residential Unsecured lending 4 Apr 17 30 Sep 17 4 Apr 17 30 Sep 17 Treasury & Other Consumer Banking Commercial Lending Residential Lending Total balances £171,263m £175,262m £3,949m £4,011m £591m Non performing £2,694m £2,740m £311
Slide 14: Low Redress Charges Continue
LOW REDRESS CHARGES CONTINUE Customer Redress Continued limited exposure to PPI. PPI Other The in-period charge reflects the £136m anticipated increase in claims expected £127m ahead of the 2019 deadline. £103m £73m £69m £59m £52m £25m FY 11/12 FY 12/13 FY 13/14 FY 14/15 FY 15/16 FY 16/17 H1 16/17 H
Slide 15: Remained Active in Capital and Funding Markets
REMAINED ACTIVE IN CAPITAL AND FUNDING MARKETS Public Term Issuance (£bn equivalent) Raised £795m of equity through issuing additional CCDS. Transaction designed to reaffirm the Society’s ability to access inorganic capital CCDS and improve liquidity of instrument. Tier 2 Made further progress towar
Slide 16: Strengthening Capital Ratios
STRENGTHENING CAPITAL RATIOS Movements in CET1 Ratio Peer Group CET1 Ratio¹ 29.6% 29.6% 2.4% 0.4% 15.5% 14.9% 14.6% 13.1% 12.1% 25.4% 1.4% Mar 17 Profit CCDS Other Sep 17 Nationwide RBS Lloyds HSBC Barlcays Santander UK Movements in end-point UK Leverage Ratio Peer Group UK Leverage Ratio¹ 4.9% 6.1%
Slide 17: On Course to Meet MREL in Advance of January 2020 Target Date
ON COURSE TO MEET MREL IN ADVANCE OF JANUARY 2020 TARGET DATE Going concern capital MREL £12bn % of RWA £16bn AT1 Buffers1 32.6% £14bn £10bn 29.6% 26.7% £12bn £8bn Buffers1 21.7% £10bn £6bn £8bn 6.6% of leverage 6.5% of leverage CET1 exposure exposure 3.25% of 12.9% £6bn £4bn leverage Buffers1 expos
Slide 18: High Quality Liquid Asset Buffer
HIGH QUALITY LIQUID ASSET BUFFER Liquid assets Liquidity portfolio composition changed as £1.8bn FLS redemptions reduced treasury bills and £3.5bn TFS drawings increased cash. £27.5bn £27.5bn Other securities increased due to the addition of £1.2bn of RMBS Other securities 1 £2.8bn £3.7bn assets fro
Slide 19: Outlook & Summary
Outlook & Summary @ Nationwide
Slide 20: Supporting Members in Challenging Outlook
SUPPORTING MEMBERS IN CHALLENGING OUTLOOK Propositions Housing Maintained member financial benefit at £245m in the period. Housing market will remain subdued with modest growth outlook. Passed on the full benefit of the base rate rise to all members Further interest rate rises are likely to be gradu
Slide 21: Building Society, Nationwide
BUILDING SOCIETY, NATIONWIDE Launched Leading for Mutual Good leadership Launched 5-year social investment programme. programme, helping people find a fit place to call home. Refreshed 150-strong PRIDE Champion community. UK top three Outstanding Employer in Korn Ferry's 2017 employee engagement awa
Slide 22: @ Nationwide
@ Nationwide
Slide 23: Appendices
Appendices @ Nationwide
Slide 24: Contacts
CONTACTS Alex Wall Head of Investor Relations, Rating Agencies & Capital alexander.wall@nationwide.co.uk 0845 602 9053 Nationwide Treasury Mailbox nationwide.treasury@nationwide.co.uk 24
Slide 25: Glossary
GLOSSARY Customer satisfaction measure Definition Net satisfaction in core products © GfK 2017, Financial Research Survey (FRS), 12 month rolling data from September 2015 to September 2017, proportion (slide 5) of extremely/very satisfied customers minus proportion of extremely/very/fairly dissatisf
Slide 26: Disclaimer
DISCLAIMER This presentation has been prepared by and is the property of This communication must not be acted on or relied on by It has no regard to the specific investment objectives, financial Nationwide; changes in business strategy, lending practices or Nationwide Building Society (“Nationwide”)
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