Nationwide Building Society has reported a 15 per cent fall in profits for the year, after the company committed to a spending drive on digital banking services and faced fierce competition in the home lending market.

The building society reported pre-tax profits of £833 million for the financial year to 4 April, down from £977 million last year.

The lender pointed towards a £227 million charge linked to technology spend as it forges ahead with a £1.3 billion investment in digital banking services over the next five years.

In addition, Nationwide said its net interest margin - a metric of underlying lender profitability - was down to 1.22 per cent from 1.31 per cent the previous year.

Chief executive Joe Garner said: “During the year, we announced a significant boost in our technology investment over five years to ensure we continue to excel on service.

“These were conscious decisions we were able to make as a building society. As we expected, they have had an impact on profits in the short term, but these choices are in the long-term interests of our members.”

The lender committed to tackling the rapid decline in physical bank branches and ATM machines with a pledge to keep a branch in every town or city that current has one for the next two years – a measure particularly aimed at ensuring vulnerable customers are not left behind by the uptake of digital and app-based banking.

It also used its annual report to launch a new current account for small businesses after it secured a £50 million grant from the RBS remedies fund to increase competition in the UK’s business banking market.

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