By Matt Scuffham
LONDON (Reuters) - Britain's biggest customer-owned lender Nationwide
Nationwide, Britain's second biggest provider of home loans, said the tax cost was the equivalent of the capital required to fund 10 billion pounds worth of lending.
Chief Executive Graham Beale warned that the introduction of a new surcharge on profits from next year, announced by Finance Minister George Osborne last month, would have a disproportionate impact on building societies, which are smaller than major banks and focus on domestic lending.
"This represents a missed opportunity to support diversity by acknowledging that building societies are different to banks and to recognise the contribution Nationwide and other mutuals make by lending to the UK economy, and the housing market in particular," Beale said in a statement accompanying the lender's quarterly results on Tuesday.
Nationwide paid 28 million pounds in tax under Britain's existing bank levy in the 2014/15 tax year.
In an interview with Reuters, Beale said the new surcharge would see its net tax cost rise to between 90 million and 100 million pounds in the 2016/17 financial year, the first in which the new rules will have a full impact.
CAPITAL STRENGTH
Beale said customer-owned lenders such as Nationwide should be treated differently to banks because they are less of a risk to the British economy.
"Instead of having a surcharge of 8 percent for the large mutuals, to acknowledge that we're different with a different risk profile, it could have been 4 percent," he said.
Nationwide reported a 52 percent increase in first-quarter underlying profit to 400 million pounds and a 50 percent rise in statutory profit to 379 million.
It provided more than a quarter of overall net lending to the British housing market during the period. Nationwide's gross mortgage lending rose 17 percent to 6.8 billion pounds and net lending climbed 23.5 percent to 2.1 billion pounds.
Nationwide is targeting a 10 percent share of Britain's personal current account market. Its share remained unchanged at 6.8 percent in its first quarter, which started in April.
Nationwide said its core tier 1 ratio, a key measure of financial strength, rose 1 percentage point to 20.8 percent, higher than any British lender. Its leverage ratio strengthened 10 basis points to 4.2 percent.