By Daniel Hunter

Nationwide Building Society has reported a 54% rise in annual profits to £1.04 billion.

The figures meant that Nationwide regained its place as the UK's second largest mortgage lender.

Income generated from interest on its savings deposits and investments rose £458m to £2.8bn. Net mortgage lending - the value of new mortgages minus mortgages repaid in full - was down from £9.9bn to £7.1bn, giving Nationwide a 32.5% share of the market.

Nationwide also announced that chief executive Graham Beale will retire next year.

Mr Beale said: "Nationwide is in great shape and is demonstrating how a mutual building society can make a real and refreshing difference in the financial services sector.

"Succession of leadership is best dealt with from a position of strength and hence the time has come for the society to identify and appoint its next chief executive. In the meantime, there is lots to do and there are exciting opportunities ahead, so it is very much business as usual."