NATIONWIDE and other mutuals have loaned £33 billion to support the economy in the past three years while banks have loaned minus £1bn, the UK's major building society has said.

Nationwide said its 36 per cent fall in net mortgage lending to £3.6bn in the first half was due to big rivals finally reopening for business.

"It is only this year that we saw Lloyds and Santander return to the market in any kind of scale, and in a way where they wanted to promote positive net lending for their businesses," Nationwide's retail director Chris Rhodes said. Barclays and RBS had been active since 2013, he added.

"But we are still clearly punching well above our weight, with 12.1 per cent of gross lending and nearly 25 per cent of all new net lending in the UK."

But the UK's third biggest lender succeeded in almost doubling its own profits as it hiked its net interest margin - the gap between its savings and lending rates - from 1.13 per cent to 1.48 per cent, boosting underlying profit by 83 per cent to £606million and pre-tax profit by 113 per cent to £598m. On whether this was at the expense of savers, Mr Rhodes said: "We have followed market trends in terms of the rates of interest we pay to savers, because ultimately we can't be an outlier and take huge volumes of savings without being able to lend sensibly in the mortgage market."

He added that compared with the banks, the society operated on a "fundamentally lower margin".

Nationwide said almost 1m savers had benefited from "higher interest rates" via its Loyalty Saver reward for long membership, and Nationwide had accounted for 21 per cent of the market growth in Isa balances this year following the rise in the Isa limit that Nationwide long campaigned for. There was a £3.5bn increase in member deposit balances, a market share of 13.8 per cent. On RBS's promotion of its ethical move away from 'teaser' rates, Mr Rhodes commented that Nationwide had this year scrapped temporary bonuses and entry restrictions on its savings accounts because it was "the right thing to do" - though it had not highlighted the changes.

He said that if the Government launched its Pensioner Bonds in January at the promised rates of 2.8 per cent for one year and four per cent for three years, it would have no effect on the savings market. "They are so far away from the market rate that the market will let NS & I take its £10bn, and then it will return to normal."

The society has strengthened its position in the current account market, where its share is now 6.6 per cent, gaining a customer from another bank every 50 seconds. Mr Rhodes noted that despite a "pretty competitive" market, only 1.2m accounts were switched last year out of a total 67m.

Nationwide said the economy was "becoming more tolerant to an increase in interest rates" but warned that mortgage arrears were likely to increase whenever rates did rise.

The society accounts for less than 3 per cent of all industry complaints, and its decisions are upheld by the ombudsman in 88 per cent of cases, more than twice the industry average of 43 per cent.

Graham Beale, chief executive, said Nationwide was delivering "better service than our banking peers" and its culture was "focused entirely on the needs of our membership and is in contrast to the traditional shareholder model of the banks".

On a report this week by the Building Societies Association that there was less diversity than ever in financial services, Mr Rhodes said this was due entirely to the loss of the Cooperative Bank's mutual status.