...VR Reflects Low -Risk Business: Nationw ide Building Society's ratings reflect its leading franchise in UK mortgage lending, conservative risk appetite and healthy asset quality. Funding, liquidity and capitalisation are sound. Nationw ide's business model, w hich is w eighted tow ards domestic mortgages and savings, w hile pan-UK, is undiversified compared w ith higher rated international peers and acts as a constraining factor to the society's overall ratings. Healthy Asset Quality: Its assets mainly consist of residential mortgage loans, w hich continue to perform w ell, w ith low arrears and generating low loan impairment charges (LICs). We expect its asset quality is to w eaken if pressures on affordability or unemployment rise, given its domestic focus, but for LICs to remain manageable given the secured nature of its loans . Adequate Profitability: Profitability has come under pressure from strong competition on new mortgage business, low interest rates and heightened costs caused...
