Nationwide has unveiled plans to distribute a £340 million payout to its customer base following a 40 percent increase in annual profits.

The UK’s biggest building society, which is owned by its customers, will provide a £100 reward directly to eligible current accounts as part of its Fairer Share Payment.

The payment is scheduled for next month, and Nationwide intends to continue making annual distributions as long as they do not undermine its financial strength.

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The boost in profits, with pre-tax earnings reaching £2.2 billion in the year ending April 4, marks a significant rise from the £1.6 billion achieved in the previous 12 months.

This performance was primarily driven by rising interest rates throughout the year, which have benefited banks as a whole due to the Bank of England’s efforts to combat inflation.

Nationwide faced its share of challenges, with a four percent increase in costs attributed mainly to inflation.

However, the building society managed to offset some of the additional expenses through cost-saving measures.

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It acknowledged the impact of the ongoing cost of living crisis on its customer base and set aside an additional £126 million to cover potential bad loans.

During the 12-month period, net lending declined by 10 percent due to the challenging economic conditions and the temporary withdrawal of mortgage deals following the government mini-budget led by Liz Truss, which caused market instability.

Chief executive Debbie Crosbie told Sky News: “We have delivered a strong financial performance by providing banking that is fairer, more rewarding and for the good of society.

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“Our strongest financial performance means that we are able to launch the Nationwide Fairer Share Payment, as well as the Nationwide Fairer Share Bond – with a highly competitive interest rate on savings for our existing members.

“We can do this because we’re a building society, not a bank, and our profit is reinvested for our members’ benefit.”

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