Nationwide wins current account customers from rivals

Building society says 20% more accounts opened in the nine months to December than in the same period in 2012

Nationwide reports net mortgage lending of £8.4bn in the nine months to December, taking its share of that market to 75%. Photograph: Fiona Hanson/PA

Nationwide snatched current account customers from rivals in the first nine months of its financial year and also lent more to mortgage customers than the whole of the previous year.

Issuing a quarterly update on its performance for the first time, the UK's largest building society said it had been a "net beneficiary" of the seven-day switching service for current accounts which was launched in September.

But Nationwide's share of current accounts remained at 6%, below its target of 10% of a market regarded as a crucial area for competition on the high street.

In the nine months to the end of December 20% more current accounts were opened at Nationwide than the same period the previous year amid anecdotal evidence that it has benefited from the problems at the Co-operative Bank. The bank is no longer majority-owned by the Co-operative Group after being rescued by bondholders, including US hedge funds.

The switching service is intended to bolster competition in the retail banking sector, dominated by the big four – Lloyds Banking Group, Royal Bank of Scotland, HSBC and Barclays.

The society, based in Swindon, Wiltshire, reported net mortgage lending – which strips out loans being repaid – of £8.4bn, the same amount as the whole of the previous financial year.

This meant it took a 75% share of the net lending market for mortgages, where activity in general has been bolstered by the help to buy and funding for lending schemes.

"We are punching above our weight in all of our principal marketplaces. We're more than holding our own against the established banking models," the society's chief executive, Graham Beale, told Reuters. "Through the current account transfer process, we are gaining three times more customers than we are losing."

The trading update was required from Nationwide after it issued a new type of financial instrument known as core capital deferred shares (CCDS) to bolster its financial strength as an alternative to shares that banks are able to sell to investors.

As a result of the issue, the society is on track to hit a target for its leverage ratio (a measure of financial risks and capital strength) of 3% before the end of 2015 deadline set by the Bank of England's prudential regulation authority (PRA). Since the issue of the CCDS in November the leverage ratio has improved from 2.3% to 2.6%.

Barclays was forced to tap its shareholders for £5.8bn of cash last year after being set the leverage target.

Beale said: "This trading performance translates into a strong set of financial results with underlying profit up 105% to £539. Retained earnings, together with the successful issuance of capital in December 2013, have further strengthened our capital ratios and we are significantly ahead of the plans agreed with the PRA last year."