LONDON, May 23 (Reuters) - Nationwide Building Society said it could realise as much as a 1.5 billion pound ($1.91 billion) gain on its acquisition of rival Virgin Money, announced earlier this year and expected to close in the fourth quarter.
The gain reflects the gap between Virgin Money's tangible net asset value of 4.4 billion pounds and the acquisition price of 2.9 billion pounds, Nationwide said, noting that the final figures on completion could vary.
The deal showed Nationwide's strong financial position as a member-owned society with a cheaper cost of capital than many rivals, Chief Executive Debbie Crosbie told Reuters.
"Strategically as a mutual that puts us in quite a different place to not only make the acquisition, but deliver value and benefit back to our members," she said, adding that Virgin Money customers should benefit in the long run as well.
Nationwide also reported that its annual profit fell to 1.8 billion pounds ($2.29 billion), from 2.2 billion a year earlier as competition in the mortgage market squeezed margins.
Although profit fell, Nationwide said it rewarded customers with a record 2.2 billion pounds in value, including a 344 million pound cash payout and better than market rate pricing on products.
Nationwide extended its promise not to close more of its 605 branches until 2028, at a time when Britain's high street lenders are slashing their outlets across the country as customers increasingly bank online.
Credit impairment charges reduced to 112 million pounds from 126 million the year prior, and Nationwide said mortgage arrears remained low although they have started to increase as higher interest rates push up monthly payments for homeowners. ($1 = 0.7862 pounds) (Reporting By Lawrence White Editing by Tomasz Janowski, Kirsten Donovan)
Nationwide Ccds (NBS)
Virgin Money Uk (VMUK)