Nationwide, the country's biggest customer-owned financial services group, posted higher underlying profits on Wednesday, helped by lower bad debt charges, and said it was well-placed for future growth.
Nationwide said its underlying profits had risen 30 per cent from last year to £276m, and that charges for loans that have gone sour fell 35 per cent.
"The business has emerged from the financial crisis in good shape, with strong capital ratios, high levels of liquidity and a flexible funding base, and we are well positioned for the future," Chief Executive Graham Beale said in a statement.
Nationwide competes with the "Big Four" banks - Lloyds, Royal Bank of Scotland, HSBC and Barclays - in the UK financial services sector.
The banking industry has recently been rattled by having to pay out billions to customers who were wrongly sold payment protection insurance (PPI).
Earlier this month, Lloyds took a £3.2bn hit from the insurance mis-selling scandal, while Barclays and RBS each took charges of nearly £1bn, but Nationwide took a far smaller hit of £16m on the PPI mis-selling.
The PPI policies were typically taken out alongside a personal loan or mortgage to cover repayments if customers fell ill or lost jobs.
But the policies were sold to self-employed or unemployed people who would not have been able to claim and to consumers who did not realise they were taking out a policy.