Nationwide Building Society

The stable outlook reflects our view that Nationwide will continue to deliver resilient capital generation through earnings and maintain a robust balance sheet. We expect that Nationwide's multiyear integration timetable for its VMUK acquisition will mitigate execution risks. We project that the RAC ratio will fall to about 11% on completion of the transaction and then strengthen gradually, and our ALAC ratio will remain above the threshold consistent with a two-notch rating uplift. We could lower our rating if Nationwide's performance came under significant pressure, likely precipitated by stronger-than-expected competition, weakening cost control, a material increase in Nationwide's risk appetite, or deterioration of the U.K. economy. We could also lower the rating if unexpected integration challenges were to arise in

...Nationwide Building Society (Nationwide) has a strong capital position and business performance, but its concentrated exposure to the leveraged U.K. household sector remains a key risk. Nationwide's deep U.K. mortgage franchise, disciplined strategic execution, and cautious risk appetite translate into significant financial resilience and support our rating. The firm delivered solid half-year results in September 2024, with underlying profit before tax of ú959 million after ú1.26 billion in September 2023, on the back of persistently high interest rates, a low impairment charge, and good cost control. The society remains one of the U.K.'s largest residential mortgage lenders and savings providers, focusing mainly on prime residential mortgage loans, and has a relatively small commercial lending portfolio....

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