NATIONWIDE Building Society which is based in Swindon and is the biggest building society in the UK has posted record pre-tax profits after eating further into areas once dominated by the banks.

The UK's fourth largest mortgage lender notched up a nine per cent pre-tax profits rise to £559.2m for the year to April 4, boosted by its growing presence in the market for current accounts and credit cards.

While mortgage lending was down again, Nationwide's move towards quality mortgage business appeared to be paying off with arrears levels bucking a national trend.

But the big growth came in savings and investments with retail savings deposits leaping almost a quarter in a year, or £8.3bn, to give the society a 12.8 per cent market share while gross sales of banking products jumped 11 per cent with 874,000 products sold.

The society pointed to the popularity of new products such as a savings account aimed at the over 65s which has attracted around 80,000 customers since its launch in July.

Nationwide also secured a 17 per cent slice of the market for Child Trust Funds.

Commercial and communications director Stuart Bernau highlighted success in building savings business and cutting mortgage arrears but pointed to the growth in banking products as the key to success.

He said: "The area where we have done particularly well is in what we call the traditional banking markets, current accounts, credits cards, personal loans."

Mr Bernau added that the key driver in the savings field had been products rather than a trend among consumers towards savings rather than borrowing.

"Part of that has been that our competitors have been chipping away at their savings rates and our savings rates have been very good value for our customers," he added.

The year saw Nationwide pump an estimated £690m into interest rates, fees and charges a seven per cent increase on the amount spent in the previous year.

In mortgages, the society saw a drop in net lending, from £10.9bn to £6.3bn.

Last year it said that it was planning to do less mortgage business in order to focus on quality customers at a time of uncertainty in the housing market.

The policy appeared to have paid off with Nationwide cutting arrears of more than three months to 0.28 per cent, compared with a rising national average of 0.97 per cent.

It now has fewer than 100 properties in repossession, Mr Bernau said.

He was also optimistic that the property market showed positive signs after a soft landing from the boom times of recent years.

Mr Bernau added: "I think the fear of a housing crash has receded, most people expect it to be at a slight increase but at a very much more manageable level."