Nationwide Building Society · LSE:NBS
Nationwide Building Society — FY 2023/24 Earnings Presentation
35 slides from Nationwide Building Society's earnings presentation, Nov 23, 2024
Slide 1: Annual Results Presentation
Annual Results Presentation For the twelve months ended 4 April 2024
Slide 2: We have made strong progress against our strategy
We have made strong progress against our strategy More rewarding Simply brilliant Beacon for Continuous relationships service mutual good improvement Deeper, broader, more lifelong Personalised service you can trust, at Famous for having a meaningful impact Being focused, fit and fast and delivering
Slide 3: Financial update
Financial update Nationwide, standalone basis 3
Slide 4: Financial performance remains strong
Financial performance remains strong £million FY 2023/24 FY 2022/23 % change • Net interest income decreased by £48m, as the deposit funding benefit from rising interest rates was more than Net interest income 4,450 4,498 (1%) offset by declining mortgage margins. • Costs increased by £99m due to in
Slide 5: We maintain a low risk, strongly capitalised balance sheet
We maintain a low risk, strongly capitalised balance sheet £billion 4 Apr 2024 4 Apr 2023 % change • Residential mortgages grew, with market share of balances Residential mortgages 204.1 201.4 1% increasing to 12.3% in a competitive environment. • Retail deposit balances increased due to growth in s
Slide 6: Net interest margin trending lower
Net interest margin trending lower Net interest margin movements, % Reserves 1 structural hedging Net interest income, net interest margin, % £6bn 1.57% 1.56% 1.80% • Net interest margin decreased by 1bp in the year £5bn 1.26% 1.60% to 1.56%. 1.13% 1.21% 1.40% £4bn 1.20% £3bn 1.00% • Increased depos
Slide 7: Retail mortgages performance
Retail mortgages performance Mortgage balances by product type, £bn1 1.2 250 • Retail mortgage balances1 were £204bn at £191bn £191bn £194bn £198bn £204bn £202bn £202bn £204bn the end of the period, reflecting a modest 200 1 20% 19% 17% 15% 13% 11% 11% 11% 150 improvement in housing market activity.
Slide 8: Retail deposits performance
Retail deposits performance Retail deposit mix, % Average deposit rates (annualised), % 1.2 £187bn £191bn £193bn 250 6% • Retail deposit balances1 increased by £181bn 1 200 5% £6.3bn, supported by competitive 19% 18% 16% 15% 0.8 150 4% pricing and increased levels of 12% 20% 27% 28% 100 3% 3.12% acc
Slide 9: Strong cost discipline despite the inflationary backdrop
Strong cost discipline despite the inflationary backdrop £million FY 2023/24 FY 2022/23 Change • Total costs were 4.3% higher compared to the prior year. Business as usual 1,600 1,485 115 ↑ • Excluding the Bank of England levy Investment & depreciation 736 727 9 ↑ previously recognised through incom
Slide 10: Stable credit performance amidst continued economic uncertainty
Stable credit performance amidst continued economic uncertainty Evolution of loan book (%, LHS) and Cost of Risk (bps, RHS) Mortgages Unsecured Retail lending 100 50 4 Apr 2024 4 Apr 2023 4 Apr 2024 4 Apr 2023 95 40 Total balances (£m) 204,467 201,662 4,263 4,408 30 90 Provision balances (£m) 321 28
Slide 11: Liquidity analysis
Liquidity analysis LCR Pillar 1, 12m rolling average1, % Liquid assets, £bn 60 210% • The 12-month average LCR was 191% (4 April 50 200% 50 47 2023: 180%). Our internal assessment of liquidity explicitly considers characteristics of 190% 40 Nationwide’s deposit book, including factors 30 that we exp
Slide 12: Robust wholesale funding position supported by strong credit ratings
Robust wholesale funding position supported by strong credit ratings Wholesale funding issuance, £bn: FY to date1,3 Wholesale funding portfolio by instrument1, % 5.2 • We have repaid £12.4bn of TFSME ahead of 0.1 4.4 18% contractual maturity, leaving £9.3bn of drawings 1.2 2% 33% outstanding. 0.2 1.
Slide 13: 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 £17.8bn £10.2bn £7.6bn £16.1bn £10.7bn £5.4bn £23.5bn £
Slide 14: Acquisition of Virgin Money plc
Acquisition of Virgin Money plc Subject to receipt of relevant regulatory permissions 14
Slide 15: Acquiring VM will increase financial resilience and provide diversity
Acquiring VM will increase financial resilience and provide diversity In March 2024, we confirmed our offer to buy Virgin Money. We continue to make good progress on plans, with Virgin Money shareholders having now voted in favour of the acquisition. We believe this deal will provide our members wit
Slide 16: Adding scale and the ability to serve a broader set of customer needs
Adding scale and the ability to serve a broader set of customer needs Customer deposits1, £bn Retail mortgages, £bn +35% +28% 261 SME deposits New capability 261 193 204 68 57 Nationwide Virgin Money Combined Nationwide Virgin Money Combined Business lending2, £bn Unsecured lending3, £bn +173% +165%
Slide 17: Delivering strong financial benefits for the Society
Delivering strong financial benefits for the Society • In the last financial year, Virgin Money generated pre-tax profits of £345m1 and announced distributions of over £270m1 to shareholders; post- acquisition, Nationwide Group will be able to retain these profits in the UK for the benefit of custom
Slide 18: Integration will be considered and gradual, prioritising customers
Integration will be considered and gradual, prioritising customers Branch Promise extended until at Virgin Money to continue as a separate least the start of 2028, with an legal entity; combined group will be intention to retain a Virgin Money subject to consolidated supervision of the branch everyw
Slide 19: Nationwide
“ nationwide
Slide 20: Appendix
Appendix 20
Slide 21: Multiple economic scenario assumptions
Multiple economic scenario assumptions 5-year Unemployment rate, % Scenario & weighting Variable (%) 2024 2025 2026 Peak² Trough2 average¹ 10 GDP growth 1.6 1.6 1.6 1.6 8.4 0.4 9 Upside 10% Base rate 4.8 4.0 4.0 4.2 5.3 4.0 8 (4 April 2023: 10%) HPI growth 5.5 3.8 3.8 4.1 22.6 0.7 7 Unemployment rat
Slide 22: IFRS 9 staging and provisioning by portfolio
IFRS 9 staging and provisioning by portfolio Owner-occupied mortgages¹ But-to-let & legacy mortgages Unsecured 4 Apr 2024 4 Apr 2023 4 Apr 2024 4 Apr 2023 4 Apr 2024 4 Apr 2023 Provision Provision Provision Provision Provision Provision Balance Balance Balance Balance Balance Balance coverage covera
Slide 23: LTV distribution of residential mortgage portfolios
LTV distribution of residential mortgage portfolios Loan book balances (by value): 4 April 2024 New business1 (by value): FY 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% 62.1
Slide 24: Mortgage portfolio refinancing profile
Mortgage portfolio refinancing profile Fixed rate maturities, owner-occupied portfolio, £bn £12bn 8% £10bn 7% 6% £8bn 5% • Approximately 40% of fixed rate £6bn 4% balances across the residential £4bn 3% mortgage book have refinanced since 2% September 2022. £2bn 1% £0bn 0% Q2 2024 Q2 2025 Q2 2026 Q2
Slide 25: Structural hedge and NII/EVE sensitivity analysis
Structural hedge and NII/EVE sensitivity analysis Structural hedging programme Structural hedge 50 1.8% • We undertake structural hedging of our CCDS, reserves and stable1 1.6% personal current account balances to smooth income volatility from 40 1.4% short-term changes in interest rates. 1.2% 30 •
Slide 26: 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 2023/241 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 27: Nationwide continues to perform strongly in Bank of England stress tests
Nationwide continues to perform strongly in Bank of England stress tests ACS 2022/23 CET1 drawdown and low-point post management actions, % • As a D-SIB, Nationwide is subject to the 25 Bank of England’s stress testing regime. 4.2 20 • The 2022/23 Annual Cyclical Scenario 15 (ACS) assumes a signific
Slide 28: Responsible Business
Responsible Business 28
Slide 29: Our ESG ratings remain strong
Our ESG ratings remain strong ESG Assessment Score Scale Last review Moody’s ESG Assessment 62 0 to 100 July 2023 ESG Rating1 ISS ESG Rating C+, Prime A+ to D- September 2023 CDP Climate Change AAA B A to D- February 2024 Disclosure S&P Global ESG Score 54 0 to 100 February 2024 Leader We’re also ra
Slide 30: Our Mutual Good Commitments underpin our strategy
Our Mutual Good Commitments underpin our strategy Demonstrating how our business supports the UN Sustainable Development Goals (SDGs) in areas we believe we can make the most significant positive impacts for our communities and society as a whole More rewarding Simply brilliant Beacon for Continuous
Slide 31: We published our net-zero-aligned Transition Plan
We published our net-zero-aligned Transition Plan We continue to deliver actions detailed within our Transition Plan, and report progress against our intermediate science-based targets Greening our own business operations Delivering green finance propositions • Removed gas from 80% of our branches a
Slide 32: We continue to enhance our climate risk capabilities
We continue to enhance our climate risk capabilities Completing an internal climate scenario analysis exercise and incorporating nature-related risk within our risk management framework Cause Climate change is considered across Nationwide’s entire Enterprise Risk Management Climate Change Physical r
Slide 33: 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 34: Disclaimer (1/2)
Disclaimer (1/2) 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
Slide 35: Disclaimer (2/2)
Disclaimer (2/2) This presentation may also contain certain forward-looking statements with respect to the financial condition, results of operations and businesses of Nationwide and the Nationwide Group (being Nationwide and its subsidiaries and subsidiary undertakings) and Virgin Money UK PLC (“Vi
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