Nationwide will pay £340m directly into customer accounts for the first time, after a jump in deposits and higher interest rates drove annual profits up 40% to record highs.
Britain’s biggest building society has tended to use profits to offer better rates on savings, loans and mortgages for its members but on Friday it launched an inaugural programme that will distribute funds directly to customers, akin to shareholder payouts made by banks.
Eligible customers will receive about £100 directly into their accounts in June.
It comes as Nationwide reported a 40% jump in annual pre-tax profits to £2.2bn – a record high – up from £1.6bn a year earlier. The building society benefited from the rise in UK interest rates, which have climbed to 4.5% over the past year and allowed lenders to charge customers more for loans and mortgages.
However, Nationwide also had an increase in deposits, which rose by £9.1bn to £187bn, at a time when rival high street banks reported outflows due in part to growing competition in savings rates. Its overall market share also grew to 9.6% from 9.4% a year earlier.
The building society’s bosses said they plan to make payouts to members every year, provided it does not harm its financial position.
“We have delivered a strong financial performance by providing banking that is fairer, more rewarding and for the good of society,” the chief executive, Debbie Crosbie, said.
“Our strongest financial performance means that we are able to launch the Nationwide fairer share payment, as well as the Nationwide fairer share bond – with a highly competitive interest rate on savings for our existing members. We can do this because we’re a building society, not a bank, and our profit is reinvested for our members’ benefit,” she said.