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UK’s Nationwide to pay 340 million pounds to customers after profit leap

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UK’s Nationwide to pay 340 million pounds to customers after profit leap

LONDON (Reuters) -British lender Nationwide will pay its customers 340 million pounds ($429 million) through payments to their current accounts, it said on Friday after reporting a 40% leap in annual profit driven by a long run of Bank of England rate hikes.

The country’s largest building society said it would make a 100 pound payment to eligible customers next month, adding that this will be its first such distribution and that the society aims to repeat this in future years.

Nationwide reported pretax profit of 2.2 billion pounds for the year to April 4, up from 1.6 billion pounds the previous year.

The payment to customers is an unusual move for a British lender, with companies typically returning cash to investors after annual results.

Nationwide CEO Debbie Crosbie said the unusual move was possible because the lender was a building society owned by customers.

The lender nonetheless said that Britain’s tough economic outlook could lead to more customers falling behind on loan repayments and it set aside 126 million pounds to cover possible soured loans, compared with the release of 27 million pounds of reserves the previous year.

($1 = 0.7923 pounds)

(Reporting by Iain WithersEditing by Jason Neely and David Goodman)