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Nationwide income decreases

THE Nationwide Building Society, Britain's third-largest mortgage lender, reported yesterday that its full-year profit fell by 67 percent, hit by bad debts and the cost of contributions for government insurance against losses.

For the year ending April 4, Nationwide reported a net profit of 162 million pounds (US$266.4 million), down from 495 million pounds in the previous year. Revenue fell 5 percent to 9.25 billion pounds.

The company complained about competition from nationalized bank Northern Rock and about the government's insurance plan, the Financial Services Compensation Scheme, which it said placed disproportionate charges on building societies.

Nationwide recorded impairment losses on loans and advances of 394 million pounds, up from 106 million pounds a year earlier, and it made additional provisions for liabilities of 249 million pounds.

Nationwide's contribution of 241 million pounds to the Financial Services Compensation Scheme also dented profit.

During the year, Nationwide took over three smaller building societies: The Derbyshire, The Cheshire and major assets of the Dunfermline. The company booked transformation costs of 107 million pounds related to those deals, and resulting gain on business of 157 million pounds.

The government backed Nationwide's acquisition of Dunfermline, Scotland's largest building society, on March 30. Nationwide gained 2.3 billion pounds in deposits from Dunfermline's 300,000 customers, 34 branches and a 1 billion pound mortgage book, and pocketed 1.6 billion pounds from the United Kingdom Treasury.

"Profitability has been adversely affected by the low interest rate environment and increased provisions as a result of the current recession," according to Graham Beale, Nationwide's chief executive.


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