British lender Nationwide pins profit fall on Brexit chill​

Nationwide posted a profit of £886 million for the nine months, which ended on December 31, down from £946 million a year earlier. (Reuters)
Updated 09 February 2018
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British lender Nationwide pins profit fall on Brexit chill​

LONDON: Nationwide Building Society , one of Britain’s three biggest providers of mortgages, said on Friday its profit fell 6 percent as consumer spending and confidence fell following the country’s vote to leave the EU.
The results represent one of the strongest indications yet from a major lender that the Brexit vote is having a significant impact on the British economy and consumer behavior.
Nationwide posted a profit of £886 million for the nine months, which ended on December 31, down from £946 million a year earlier.
While the economy remained resilient immediately after the country’s June 2016 EU vote, there were signs of a slowdown in 2017, it said.
“Household spending, a key driver of growth, lost some momentum. Retail sales and car registrations have slowed and consumer confidence has also softened,” Chief Executive Joe Garner said.
Subdued economic activity and a squeeze on household budgets will continue to pressure house prices and profits, Nationwide said.
British house prices recorded modest growth last month, with expensive properties in London particularly struggling to sell, an industry survey showed on Thursday.
Nationwide said research with partners including debt advice charity Citizens Advice and retailer Marks & Spencer into consumer behavior showed pressures on household budgets.
“We are seeing a lot of affordability pressure, not just unsecured lending but inflationary pressures coming through in a lot of ways ... including pressure on rents,” Garner said.
Garner said that with around one in three people in Britain having little or no material savings, inflation is squeezing budgets and impacting consumer confidence.
Nationwide said its net interest margin, the gap between what it pays savers and what it charges borrowers, was steady at 1.33 percent but would likely fall this financial year and next.
The lender said it had brought onto its staff around 300 contractors who had worked in its offices for infrastructure firm Carillion, which collapsed last month in Britain’s biggest corporate failure in a decade.
Nationwide reported its underlying profit, which measures management’s view of its underlying performance, rose to £883 million from £866 million a year ago.
Nationwide’s cost to income ratio rose to 59.6 percent from 57.6 percent on higher defined benefit pension costs.


Davos 2019: Mideast CEOs turn gloomy on global economy, PwC study finds

Political and business leaders are gathering in the mountain resort of Davos in Switzerland this week. (AP)
Updated 22 January 2019
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Davos 2019: Mideast CEOs turn gloomy on global economy, PwC study finds

  • The loss of confidence from regional CEOs was the second biggest fall in the world, beaten only by North American bosses, whose optimism fell from 63 percent to 37 percent

DAVOS: Chief executives in the Middle East are much less confident on prospects for the global economy than they were in 2018, according to a report from accounting and consulting group PwC.

The firm’s annual survey of top bosses’ attitudes, traditionally launched on the eve of the World Economic Forum Annual Meeting in Davos, showed a big drop in the number of CEOs from the region who believe global economic growth will improve in the next 12 months.

Only 28 percent of Middle East business leaders now see an improvement in economic prospects, compared with 52 percent this time last year. Bob Moritz, global chairman of PwC, said: “The prevailing sentiment this year is one of caution in the face of increasing uncertainty.”

The loss of confidence from regional CEOs was the second biggest fall in the world, beaten only by North American bosses, whose optimism fell from 63 percent to 37 percent.

PwC said that the Middle East decline was due to “increased regional economic uncertainty,” while the North American fall was “likely due to the fading of fiscal stimulus and emerging trade tensions.”

The results of the PwC poll - conducted among 1,300 business leaders around the world - reflected an overall decline in business confidence in each region surveyed. Last year, only 5 percent of CEOs said that global economic growth would decline. For 2019, this has jumped to nearly 30 percent.

Globally, confidence in CEOs’ own companies to grow revenue this year has also fallen sharply. Moritz said: “With the rise in trade tension and protectionism it stands to reason that confidence is waning.”

The US retains its lead as the top market for growth among international investors, but many CEOs are turning to other markets, or investing at home. The ongoing trade conflict between the US and China has resulted in a sharp decline in the number of Chinese bosses chosing the US as a market for growth, down from 59 percent last year to only 17 percent for 2019.

Globally, CEOs are still more worried about the threat of over-regulation of their businesses - named as the top concern again in 2019 - but uncertainty about policy has become a major issue too.

In the Middle East, the main concern is geopolitical uncertainty, followed by the threat of cyberattack, policy uncertainty and the speed of technological change.