Nationwide members look set for a payout bonanza after the building society revealed a £2.3billion windfall from its takeover of Virgin Money.
Chief executive Debbie Crosbie told the Mail it was now ‘well positioned’ to repeat its previous policy of making £100 ‘fairer share’ payments to eligible customers.
And she did not rule out the prospect of a further one-off payment to reward customers after the takeover.
When asked by the Mail about such a move, Crosbie said: ‘We’re not ready to make those announcements.
‘But we’re really confident that this year we can do something that’s above and beyond what you would normally expect.’
Virgin Money’s customers will, however, not be eligible for the fairer share payment.
In charge: Debbie Crosbie is the chief executive of Nationwide
The comments came as Nationwide confirmed it has made a big gain on its £2.8billiion purchase of Virgin – as first reported by The Mail on Sunday. The deal was completed last month.
Yet the price tag was so low that Nationwide paid a lot less for Virgin’s assets than they are now deemed to be worth.
The resulting financial boost of £2.3billion was revealed as Nationwide – Britain’s biggest lender – published half-year results yesterday.
They showed record mortgage lending and increases in savings balances in the six months to the end of September, but also saw profits tumbling by 43 per cent to £568million.
Nationwide said it was mainly down to falling interest rates – as higher rates tend to mean bigger profits for lenders – as well as its ‘choice to offer competitive rates’ to customers, squeezing margins.
A spokesman for Nationwide said: ‘The economic outlook remains uncertain, and the interest rate outlook means we expect to have passed peak profitability.’
However, the boost from the Virgin deal gave bosses confidence that the building society can once again offer member benefits at the end of its financial year in March 2025.
It handed out £100 payments this year and last year alongside other offers such as high-yielding savings bonds.
Crosbie said of the prospect of another ‘fairer share’ payment: ‘While it’s always subject to board approval, we’re well positioned to make that.’
The payouts in previous years have applied only to those who hold both current accounts as well as a qualifying mortgage or savings product.
This year it paid out £385million to 3.85million customers, up from £344million the year before.
Virgin’s integration will take place over several years, with no plans to phase out the name for the time being.
John Cronin, analyst at SeaPoint Insights, said the gain on acquisition announced yesterday was ‘much higher than had been expected when the deal was first announced’.
He added that the sharp fall in profits was ‘not unexpected owing to official rate changes over the period’.
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