The payout is expected to benefit several million customers
Nationwide customers are set for a windfall with the UK’s largest building society announcing it will pay £340m from its profits directly into customers’ accounts.
The news comes after a jump in deposits and higher interest rates increased profits 40 per cent to record highs.
Nationwide, the Guardian reported, previously used profits to offer better rates on savings, loans and mortgages for its members, but on Friday, announced an inaugural programme that will instead pay customers, akin to shareholder payouts made by banks.
The ‘Fairer Share’ scheme, under which the payments will be made, Nationwide will also offer all members a Fairer Sharer Bond, which pays a rate of 4.75 per cent.
The payout will benefit 3.4 million customers, who are expected to receive about £100 in June.
Nationwide chief executive, Debbie Crosbie, said the payout plans were influenced by the rise in living costs: “It was really important to get people cash where we could, and we think it will have the most impact.”
Crosbie said the distribution of profits “is the biggest statement yet about how we use our financial strength to benefit our members”.
Nationwide plans to make the payouts to members every year, provided it does not harm its financial position.
It comes as Nationwide reported a 40% jump in annual pre-tax profits to £2.2bn, topping its previous record high of £1.6bn a year earlier.
The building society benefited from the rise in interest rates, which have risen to 4.5 per cent over the past year and allowed lenders to charge customers more. It also benefited from an increase in deposits, which rose by £9.1bn to £187bn.
Unlike banks, building societies such as Nationwide are owned by their customers rather than shareholders and are meant to be run in a way that benefits those members.
To be eligible, members must use Nationwide as their main current account and have one other product – either a savings account or a mortgage – with a minimum £100 balance.
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