Nationwide Building Society Nationwide's Response to the Stress Test Results (6597X)
November 28 2017 - 1:15AM
UK Regulatory
TIDMNBS TIDMNAWI
RNS Number : 6597X
Nationwide Building Society
28 November 2017
NATIONWIDE'S RESPONSE TO THE RESULTS OF THE BANK OF ENGLAND
STRESS TEST 2017
Today the Bank of England issued the results of its latest
Concurrent Stress Test. The specified hypothetical Annual Cyclical
Scenario (ACS) was consistent with ACS 2016 with a 33% fall in
house prices and 9.5% peak in unemployment, but with the addition
of a rapid increase in Bank Base Rate to 4%.
Despite the more severe credit shock than in the 2016 test, the
results of the 2017 test 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 12.3%, and a minimum UK leverage ratio of
4.5%, after the application of management actions. In each case the
Society remains substantially above the regulatory hurdle rates set
for this stress test of 8.4% CET1 ratio (which comprises Pillar 1
and Pillar 2a requirements) and 3.25% 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.
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.
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 17 November, Nationwide issued its interim results for the
period 5 April to 30 September 2017. These results reflected the
continued capital strengthening and security of our business with a
CET1 ratio of 29.6% (December 2016: 24.4%) and UK leverage ratio of
4.9% (December 2016: 4.3%).
For all media enquiries please contact Sara Batchelor on 07785
344137
-Ends-
This information is provided by RNS
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