Nationwide Building Society Response to Results of BoE Stress Test 2022 (6938F)
12 Julho 2023 - 3:30AM
UK Regulatory
TIDMNBS TIDM34VG
RNS Number : 6938F
Nationwide Building Society
12 July 2023
Nationwide Building Society ("Nationwide")
Embargoed to 7.30am on 12 July 2023
NATIONWIDE'S RESPONSE TO THE RESULTS OF THE BANK OF ENGLAND
STRESS TEST 2022
Today the Bank of England issued the results of its latest
Concurrent Stress Test. The specified hypothetical Annual Cyclical
Scenario (ACS) 2022 considered a 31% fall in house prices, 8.5%
peak in unemployment and Bank Base Rate peak of 6% in the first
year of the scenario.
The results of ACS 2022 confirm that Nationwide would remain
profitable in such conditions and continue to make full
distributions on all Tier 1 capital instruments, with a minimum
stressed CET1 ratio of 20.4%, and a minimum UK leverage ratio of
5.6%, after the application of management actions. In each case the
Society remains substantially above the regulatory hurdle rates set
for this stress test of 7.4% CET1 ratio and 3.6% UK leverage ratio,
both before and after the application of management actions.
The PRA has confirmed that Nationwide is not required to submit
a revised capital plan or take additional actions as a result of
this stress test exercise.
As in the stress testing exercises completed in previous years,
the CET1 ratio reduces primarily due to the impact of the
significant house price reduction, rising interest rate environment
and increase in unemployment rate on model risk weights, rather
than capital losses.
The CST 2022 exercise was modelled using currently approved
mortgage models with the June 2022 start point reflecting a
temporary model adjustment applied to risk weighted assets to
ensure outcomes are consistent with the PRA's revised IRB
regulations which became effective on 1 January 2022 (for more
information see Nationwide Pillar 3 disclosures). These regulations
aim to increase consistency of approaches across different firms
and reduce volatility of mortgage risk weights across differing
economic conditions. As expected, this has significantly reduced
the extent to which risk weighted assets (RWA) increase in ACS 2022
given the higher RWA start point.
Nationwide recognises the value of industry-wide stress testing
and continues to support the financial stability objectives of the
Financial Policy Committee and the Bank of England.
On 19 May, Nationwide issued its full-year results for the
period 5 April 2022 to 4 April 2023. These results reflected the
continued capital strength and security of the business with a CET1
ratio of 26.5% (4 April 2022: 24.1%) and leverage ratio of 6.0% (4
April 2022: 5.4%).
Contacts:
Media Queries: Investor Queries:
Sara Batchelor Sarah Abercrombie
Media Relations Head of Investor Relations, Credit Ratings
T: +44 (0)7785 344 137 and Treasury Sustainability
Sara.Batchelor@nationwide.co.uk T: +44 (0)7587 886 500
Sarah.Abercrombie@nationwide.co.uk
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END
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