Britain's biggest customer-owned lender Nationwide said its profits jumped by more than a quarter in its latest six months, driven by record mortgage lending and more than a quarter of a million new current account customers.

Nationwide said on Friday its gross mortgage lending rose 14 per cent to £14.9 billion in the six months ended September, representing 13.2 per cent of the UK market, and its net lending rose to £4.1 billion.

Nationwide is Britain’s second-largest mortgage and savings provider and said it also performed well in savings and current accounts, taking market share.

Chief executive Graham Beale said he was optimistic the lender would take further advantage of major changes across Britain's banks, which have to separate their domestic retail banking operations from riskier areas such as investment banking from the start of 2019.

Nationwide is not affected by the new rules, but its six major banking rivals are, including Barclays and HSBC.

“They have got a massive distraction. It’s a huge complicated undertaking and for the big banks it’s going to be costing them in the billions to exercise this change,” Beale said.

“These are big undertakings and it’s inevitable they will take their eye off the ball ... so we’re in a good place.”

Nationwide said its underlying profit for the six months rose to £801 million, up 27 per cent from the same period a year earlier.

Beale said the UK housing market was “healthy and strong” and he expected house price inflation to continue at about 3-4 per cent, although there could be a cool-down in the London market.

Reuters