British lender Nationwide reported an 18 per cent drop in its half-year profit, and said funding arrangements for the UK depositor protection scheme should be changed so that risk-averse banks contribute less.
Nationwide, Britain's second-biggest mortgage lender, said its underlying pretax profit for the six months to September 30th was €322 million ($506 million), down from £394 million in the same period last year.
Nationwide, owned by its savers and borrowers, blamed the decline in part on an increase in the rates it offers to savers as banks, faced with a continued freeze in the wholesale money markets, compete aggressively for depositors' cash.
Nationwide said it attracted £2.6 billion of net retail deposits over the first half of the year, giving it an estimated 34 per cent share of the market.
The increased flow of savers' money allowed Nationwide to finance its total net lending for the six months of £1.2 billion through retail deposits.
Net mortgage lending fell to £1 billion from £3.6 billion a year earlier as Nationwide tightened its lending criteria in the face of a slumping property market.
Nationwide also said it planned to lobby for a review of how individual banks' contributions towards the cost of funding the UK Financial Services Compensation Scheme - used to compensate savers in the event of a banking collapse - are determined.
"It is highly regrettable that the cost of failure of banks who took on substantially greater levels of risk than we are prepared to should be borne by Nationwide's members," the lender said.
The FSCS helped underwrite the sale of Bradford & Bingley's savings and branch business to rival Abbey, a UK subsidiary of Spain's Santander, after B&B was part-nationalised in September.
Reuters
