However, pre-tax profits fell 9 per cent in the first half, slipping to £238m, down from £259m in the first half of 2010.

The mutual pointed to positive figures from its mortgage and savings business, with mortgage advances up 48 per cent to £8.9bn in the period. Meanwhile savings deposits soared 250 per cent to £1.4bn. However, Mark Rennison, Nationwide finance director, told The Independent: “It’s a difficult environment out there. The mortgage market is very subdued.”

Despite the challenging conditions, Mr Rennison was reasonably positive on future prospects for the mortgage market. “It won’t grind to a halt,” he said, “but house prices will continue to slide sideways.” The lender does not expect interest rates to rise until 2013.

Nationwide increased focus on first-time buyers this year, lending 3 per cent more to the sector than in the first half of last year. It also posted a 24-per-cent rise in the combined sales of credit cards, current accounts and personal loans. It now has a 6.4 per cent of the UK current account market and a 2-3 per cent market share in credit cards.