Half Year Results Presentation · 23.3% RBS HSBC Lloyds Barclays Santander UK Nationwide ¹ As at...

For the half year ended 30 September 2016

Half Year Results Presentation

NationwideInterim Results2016/172

+17%

H1 16/17

£17.5bn

H1 15/16

£14.9bn

Gross Mortgage Lending

+81%

H1 16/17

£4.7bn

H1 15/16

£2.6bn

Growth in Member Deposits

45%

55%

65%

75%

Sep-11 Sep-12 Sep-13 Sep-14 Sep-15 Sep-16

Nationwide

Peer group average

Net satisfaction - Core products

+36%

H1 16/17

377,000

H1 15/16

277,000

Current Account Sales

Helping more members move up the housing ladder Protecting rates for savers through our support package

Strengthening our Current Account offering Leading service satisfaction amongst our high street peer group¹

Net satisfaction in core products

BUILDING SOCIETY, NATIONWIDE

1 © GfK 2016, Financial Research Survey (FRS) measure, as defined in the glossary (slide 16)


% ChangeH1 16/17

£m

H1 15/16

£m

UNDERLYING

INCOME

BALANCING PROFITS IN LINE WITH MEMBERS’ INTERESTS

COSTS

IMPAIRMENTS

OTHER ITEMS

STATUTORY PROFIT

1,642

938

37

81

696

(2%)

9%

UNDERLYING

PROFIT615 (23%)

-

(13%)

OTHER PROVISIONS 52 116%

3

Other items (£m) H1 15/16 H1 16/17

Transformation costs (8) -

FSCS costs (5) 4

Gains from derivatives and

hedge accounting14 77

Total 1 81

-

1,683

858

-

1

802

801

24


RESIDENTIAL

MORTGAGES

30 Sept 16

£bn % Change4 Apr 16

£bn

A LOW RISK BALANCE SHEET

OTHER LENDING

LIQUIDITY¹

RETAIL DEPOSITS²

WHOLESALE

FUNDING

168.3

16.8

30.5

149.4

55.3

4%

1%

225.5 8%

3%

21%

OTHER ASSETS 9.9 41%

4

32%

162.1

16.7

23.1

144.9

45.8

208.9

7.0

OTHER LIABILITIES

CAPITAL &

RESERVES ³

6.2

14.6

225.5

24%

11%

8%

5.0

13.2

208.9

Key Ratios 4 Apr 16 30 Sept 16

Liquidity coverage ratio 142.6% 140.6%

Wholesale funding ratio 24.8% 27.2%

CET1 ratio 23.2% 23.3%

Leverage ratio 4.2% 4.0%

Asset growth of 8% driven by

growth in residential mortgage

lending and prudent liquidity

position

Other assets and other liabilities

have increased due to fair value

movements in derivatives

1 Treasury liquidity and investment portfolio (on balance sheet) 2 Shares (member deposits) and amounts due to customers on consolidated balance sheet3 Total members’ interests and equity including subscribed capital (PIBS) and subordinated liabilities


Net Interest Margin (NIM) Evolution

MARGIN EXPECTED TO BE ONLY MODESTLY LOWER IN H2

5

1,557 1,529 1,449

739

1.46%

H1 15/16

1.58%

Q2 16/17

1.31%

Q1 16/17

710

1.35%

H1 16/17

1.33%

H2 15/16

Net Interest IncomeNet Interest Margin

(17bps)

(3bps)

(2bps)

(3bps)

Consumer

Finance

MortgagesH1 15/16

158bps

H1 16/17

133bps

Structural

hedging

& other

Commercial

Movement in NIM

1,602 1,981 2,4312,872 3,086

1,449

1.52%

H1 16/17

1.33%

FY 15/16FY 14/15

1.47%

FY 13/14

1.27%

FY 12/13

1.02%

FY 11/12

0.82%


Underlying Costs (£m)

INVESTING FOR OUR FUTURE IN A GROWING SOCIETY

36

23

8

Impact of

Strategic

Investment

H1 15/16

858

+9%

H1 16/17

938

Other

5

Regulation

& Control

Business

Volumes

8

Inflationary &

Contractual

6

COST INCOME RATIO51.0% 57.1%

Investment in enhancing our service

proposition, such as our new Banking

App, Android Pay and extending

Nationwide Now, supporting growth in

all core markets

Investment in our people, providing a

Living Pension alongside a Living

Wage, has contributed to £17m of

cost growth

Investment in resilience, security and

our control environment, ensuring the

safety and security of the Society

Investment in sustainable efficiency

improvements to deliver both short

and long term benefits


Underlying Costs (£m)

COST GROWTH EXPECTED TO SLOW AS EFFICIENCIES

ARE DELIVERED

7

Investment in simplifying processes to improve

service propositions and create sustainable

efficiency savings, including:

− Digitised sales processes

− New banking app

− Mobile payments

− Keystroke automation

Further information will be provided when we

announce our full year results

938

858

938

H2 15/16 H1 16/17H1 15/16


Impairments (£m)

REDUCED IMPAIRMENTS

FY 11/12

428

FY 13/14

383

0

H1 16/17

37

H2 15/16

73

H1 15/16FY 14/15

251

FY 12/13

591

8

Treasury & Other Consumer Banking Residential LendingCommercial LendingRetail Lending

ResidentialUnsecured

lending

Non performing

balances (£m)3,179 3,032 345 316

NPL provisions

coverage3.2% 3.2% 81% 83%

3 month+

arrears0.45% 0.45%

CML industry

average1.04% 1.01%

4 Apr 16 4 Apr 16 30 Sept 1630 Sept 16


Customer Redress (£m)

LOWER CUSTOMER REDRESS

9

FY 13/14

69

H2 15/16FY 14/15

59

H1 15/16

24

103

73

FY 12/13

103

FY 11/12 H1 16/17

52

OtherPPI


Peer Group Leverage Ratio¹

Movements in CET1 Ratio

Movements in end-point CRD IV Leverage Ratio

Peer Group CET1 Ratio¹

MAINTAINING A STRONG CAPITAL POSITION

1.5%

Sept 16

23.3%

Other

(0.1%)

RWAs

(0.1%)

Pension

Deficit

(1.2%)

ProfitMar 16

23.2%

0.3%

Sept 16

4.0%

Balance

Sheet Growth

(0.3%)

Pension

Deficit

(0.2%)

ProfitMar 16

4.2%

10

4.2%4.8%5.0%

5.6%

4.0%

LloydsHSBCRBS Santander

UK

3.9%²

NationwideBarclays

11.1%11.6%13.4%13.9%15.0%

23.3%

BarclaysLloydsHSBCRBS Santander

UK

Nationwide

¹ As at September 2016

² Santander’s leverage ratio quoted as at 30 June 2016 as it did not publish a leverage ratio calculated under the CRR definition as of 30 September 2016


CET1 resources are greater than minimum leverage and risk based requirements

We maintain a prescribed PRA Capital Buffer and an internal management buffer above minimum regulatory capital requirements

The expected MDA threshold is below current minimum leverage ratio requirements and is expected to remain so

In November 2016 the Bank of England published its policy statement on the UK MREL framework. Nationwide

expects to comply with the interim requirements applicable to the Society from 1st January 2020

£15bn

£10bn

£5bn

£0bnCET1

Requirements

Pillar 1

Pillar 2A

Buffers

Leverage

requirement

CET1

MREL¹

6% of leverage

exposure

Buffers

AT1

Buffers

End point capital

resources

CET1

AT1

Tier 2

CET1

AT1

Transitional

Capital resources

WELL PLACED TO MEET CURRENT AND EMERGING

CAPITAL REQUIREMENTS

11

% of RWA

26.2%

22.1%

11.6%

4.5%

8.1%

19.8%

14.8%

23.3%

¹Based on latest expectations; the PRA will confirm individual firm requirements shortly


Wholesale funding portfolio³ (£bn)

Liquid assets (£bn)

PRUDENT APPROACH TO FUNDING AND LIQUIDITY

121 Including FLS treasury bills and supranational bonds. 2 Cash and reserves at central banks. 3 Wholesale funding excluding FLS. ‘Short Term’ includes certificates of

deposit, commercial paper and other deposits. ‘Other’ includes £1.1bn of PEB balances. 4 Assuming no rollovers

Increase in liquid assets attributable to pre-funding of

wholesale maturities and increased collateral postings

against derivatives following the EU Referendum

Liquidity Coverage Ratio of 140.6% and Net Stable

Funding Ratio of 130.5%

Cash and government bonds¹ represented 128% of

wholesale funding maturities less than 1 year 4

Significant progress towards end-point MREL following

successful issuance of $1.25bn Tier 2

Plan to participate in the Bank of England’s Term

Funding Scheme whilst maintaining access to core

wholesale markets

8.817.4

15.3

13.81.32.5

4 Sept 16

+24%

2.3 1.227.9

34.7

4 Apr 16

Other securities Cash2Government bonds1Other liquid assets

Securitisation

4.9

Covered bonds 15.6

Other

3.0Short Term

17.6

Medium Term Notes14.2


SUMMARY

13

Award highlightsPerformance highlights

Strong trading performance

Number one for service satisfaction amongst our high

street peer group¹

Financially strong

1 © GfK 2016, Financial Research Survey (FRS) measure, as defined in the glossary (slide 16)


CONTACTS

15

Alex Wall

Head of Investor Relations, Rating Agencies & Capital

[email protected]

0845 602 9053

Sarah Gardiner

Head of Investor Relations

[email protected]

0845 602 9053

Nationwide Treasury Mailbox

[email protected]


GLOSSARY

16

Definitions used are in line with the glossary in the Annual Report and Accounts 2016. In addition, further items included in the results

presentation are defined below.

Customer satisfaction measure Definition

Net satisfaction in core products

(slide 2)

© GfK 2016, Financial Research Survey (FRS), 3 months rolling data, proportion of extremely/very

satisfied customers minus proportion of extremely/very/fairly dissatisfied customers summed across

current account, mortgage and savings, high street peer group defined as providers with main current

account market share >6% (Barclays, Halifax, HSBC, Lloyds Bank (inc C&G), NatWest and

Santander). Prior to April 2015, Lloyds Bank and TSB combined as Lloyds TSB Group (including

Lloyds Bank, TSB and C&G).

Number one for service satisfaction

(slide 13)

© GfK 2016, Financial Research Survey (FRS), 3 months ending 30 September 2016, proportion of

extremely/very satisfied customers minus proportion of extremely/very/fairly dissatisfied customers

summed across current account, mortgage and savings, high street peer group defined as providers

with main current account market share >6% (Barclays, Halifax, HSBC, Lloyds Bank (inc C&G),

NatWest and Santander). Prior to April 2015, Lloyds Bank and TSB combined as Lloyds TSB Group

(including Lloyds Bank, TSB and C&G).


DISCLAIMER

17

This presentation has been prepared by and is the

property of Nationwide Building Society (“Nationwide”).

By attending this presentation or accepting this

document you represent, warrant and agree that (i) you

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then you are a person who is (a) an investment

professional within the meaning of Article 19 (5)of the

Financial Services and Markets Act 2000 (Financial

Promotion) Order 2005 (“FPO”) or (b) a high net worth

entity falling with Article 49(2)(a) to (d) of the FPO; and

(vi) if you are within the European Economic Area

(“EEA”), then you are a person who is a “qualified

investor” within the meaning of Article 2(1)(e) of EU

Directive 2003/71/EC, as amended (the “Prospectus

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This presentation shall not constitute or form part of any

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In the United Kingdom, this communication is directed

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This presentation does not constitute an offering

document. The information presented herein is an

advertisement and does not comprise a prospectus for

the purposes of the Prospectus Directive and/or Part VI

of the Financial Services and Markets Act 2000. The

information herein has not been reviewed or approved

by any rating agency, government entity, regulatory

body or listing authority and does not constitute listing

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any stock exchange. Any future potential transaction is

qualified in its entirety by the information in the final form

documentation relating to any such proposed

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No representation or warranty, express or implied, is or

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directors, partners and employees as to the accuracy or

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Although the statements of fact in this presentation have

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industry to differ materially from any future results or

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looking statements. These risks, uncertainties and other

factors include, among others: general economic and

business conditions in the United Kingdom; currency

exchange and interest rate fluctuations; government,

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affecting

Nationwide; changes in business strategy, lending

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You should take such independent investigations and

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rounded. As a result of such rounding, the totals of data

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arithmetic totals of such data.

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Half Year Results Presentation · 23.3% RBS HSBC Lloyds Barclays Santander UK Nationwide ¹ As at...

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