Nationwide Building Society banked £1.8 billion deposits in September as savers rushed to find safe havens, in the wake of the Northern Rock fiasco.

The UK's second biggest savings provider and mortgage lender today reported an exceptional performance in the retail savings deposit market, with net deposits almost doubling to £4.1 billion.

Graham Beale, chief executive of Nationwide, said that £1.8 billion was at least double the value of deposits the society would expect to take in a good month. "It's impossible to say just how much money came from Northern Rock but certainly we have anecdotal evidence that people were queuing to take their money out of there, then queuing to put in our building society."

Savings balances at the building society increased by £5.8 billion, giving Nationwide a 15 per cent share of the overall increase in UK retail savings balances.

The high level of inflow of savings meant that the mutual society was able to fund all residential mortgage lending in the first half of the year from saver's deposits, putting the building society on an exceptionally stable footing in comparison to some of its rivals.

"As the financial markets have experienced unprecedented turmoil in recent months, savers have been looking for a safe home for their money. Nationwide regarded by many as offering both a safe haven and good value and we have seen a significant inflow of savings," Graham Beale, chief executive of Nationwide said.

Nationwide, which completed the largest acquisition to date in the building society sector in August when it bought the Portman, reported underlying pre-tax profit up 29 per cent to £394.4 million for the first six months of the year.

After merger and disposal costs of £47 million, reported pre-tax profit rose by 1 per cent to £338.3 million.

Following the merger with Portman, Nationwide assets are now worth £166 billion, up 21 per cent from £137.4 billion a year ago.

"We have one of the strongest and safest balance sheets of any financial organisation in the UK - our assets are of the highest quality and over 70 per cent of our funding comes from member base retail deposits," Mr Beale said.

The proportion of Nationwide mortgage accounts which are three months or more in arrears is just 0.31 per cent, compared with an industry average of 1.06 per cent.

Increased caution towards lending on the building society's part has led to a decrease in the total of prime mortgage gross lending, down 11.8 per cent to £11.9 billion.

Lending to self-employed and unusual borrowers represents around 4 per cent of the society's total loan book and buy-to-let mortgages are about 5 per cent of total loans.

Unlike Northern Rock, Nationwide's balance sheet is funded predominantly by retail savings. It's wholesale funding ratio - the amount it borrows from the markets to fund mortgages - is just 29 per cent, one of the lowest levels in the industry.

Looking forward, the building society predicts that the housing market will weaken, leading to a modest impact on net lending. It anticipates that uncertainty in equity markets will continue to mean that savers will seek out safe options for their money.

"However, as liquidity issues in the wholesale markets continue, we expect there to be strong competition for retail funds," the company said in its statement.

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