Nationwide has announced that it grew profits by 30 per cent despite low interest rates and the impact of subdued svaings and motgage markets.

The building society was boosted by by a 35 per cent reduction in provisions for bad debts to £359 million, as well as a cost cutting drive saving around £5million.

Chief executive of the group Graham Beale described the performance, in which underlying profits rose to £276m in the twelve months to April 4, as another strong year for the group.

The group also expects the return of interest rates to more normal levels will be gradual and that transaction levels in the housing market were likely to remain subdued but probably won't get as bad as the times in 2008.

The chief executive added: " Whilsts a small decline in house prices is possible over the next twelve months, we do not think that large house price falls of the magnitude seen in 2008 are likely, given that the economic environment is expected to gradually strengthen and that ineterst rates are likely to remain relatively low, limiting the level of mortgage arrears and distressed sales."