ClickAJob News

Nationwide, the UK's largest building society, appears to have benefited from the recent Northern Rock crisis.

Announcing its half-year results today the lender revealed consumers banked £1.8 billion of savings in September alone, stressing trends for October and November were following a similar pattern.

The building society said net savings deposits jumped by 96 per cent to £4.1 billion in the six months to September 30th.

Account balances – including accrued interest – totalled £5.8 billion, representing a 15 per cent share of the overall increase in UK retail savings balances.

Commenting on the performance, Nationwide chief executive Graham Beale said: "As the financial markets have experienced unprecedented turmoil in recent months, savers have been looking for a safe home for their money.

"Nationwide is regarded by many as offering both a safe haven and good value and we have seen a significant inflow of savings," he added.

The building society, which has over 13 million members, says its overall balance sheet continues to be of "the highest quality".

Unlike Northern Rock, Nationwide funds the majority of its lending from retail savings balances – making it less exposed than its competitors to the liquidity problems currently being experienced on the wholesale credit markets.

Newcastle-based bank Northern Rock was forced to secure an emergency loan from the Bank of England in September after it was unable to obtain affordable funding due to the global credit crunch – prompted by rising default levels in the US sub-prime mortgage market.

The move prompted the first run on a British bank in almost 150 years, with savers rushing to withdraw their cash from the stricken lender.

In contrast Nationwide, which stressed today it has no direct exposure to US sub-prime lending, obtains 71 per cent of its funds from customers' savings balances and so is managing to weather the credit squeeze.

The company, which merged with rival Portman in August this year, said its underlying profit before tax rose by 29 per cent to £394.4 million over the six months to the end of September – up from the £306 million reported for the corresponding period of the previous year.

Nationwide also revealed it expects to achieve savings of around £90 million a year by 2009/10, as a result of the merger.