It has been hit by a surge in bad debts and a hefty £241 million compulsory contribution to the Financial Services Compensation Scheme which guarantees savings up to £50,000.
Profits at the group, Britain's biggest building society chain which also takes in the Chelsea and the Portman building societies, tumbled 69 per cent to £212 million for the year to April 4. Provision for bad and bad doubtful debts, reflecting the rise in mortgage repossessions and arrears, rose sharply to £3394 million.
This morning the society said the £241m it had to pay into the Financial Services Compensation Scheme was "illogical". Chief executive Graham Beale added that Nationwide was the only major UK banking institution not to have to raise capital or seek access to government bailout schemes.
"We regard the fact that the FSCS charge is not linked to the level of risk posed to the financial system by individual institutions, but instead is allocated by share of the retail savings market, as illogical and unfair, producing a disproportionate outcome for the low risk retail funded institutions, particularly building societies," Mr Beale said.
He said only 0.6 per cent of its home mortgage customers were more than three months in arrears - compared with the Council of Mortgage Lenders industry average of 2.39 per cent as at 31 March.
Nationwide profits were also hit by costs linked to it integrating the Portman, Cheshire and Derbyshire building societies. Still to come is the cost of taking on the Dunfermline which was brought down by bad debts on a multi million pound commercial property portfolio
But the building society complained about the way that its FSCS contributions were calculated.
Meanwhile the stock market opened broadly higher this morning, helped by strong overnight gains in Wall Street and the Far East.
Shares in ITV jumped more than 10 per cent after a leading broker ditched its sell rating amid hopes of a recovery for the media sector next year.The upbeat note from Goldman Sachs helped the battered stock to the top of the FTSE 250 Index risers board, up 3p to 31p in the first hour of trading. In the wider market, the FTSE 100 Index continued its rally – up 23.5 points at 4435.3 before settling down later – after better-than-expected US consumer confidence figures boosted world markets yesterday.
Royal Bank of Scotland added a penny to 41.2p and Barclays rose 6p to 295.25p, but the top flight risers board was topped by Argos owner Home Retail Group after a gain of 10.5p to 237p. The performance of the retail sector overall was mixed, with Next down 31p at 1446p and Marks & Spencer 4.25p lower at 283.5p, a fall of 1%. DSG International was 2.25p higher at 25.5p in the FTSE 250.
