The ratings on Nationwide Building Society reflect its position in the U.K. mortgage market, strengthened asset quality, improved operating efficiency, and good capitalization. Profitability remains satisfactory, despite the dampening effects of a strategy of rewarding members through competitive pricing. This reflects Nationwide's commitment to retaining its mutual status. In July 1998, Nationwide voted to remain mutual. Revised membership conditions introduced in 1997 mean that new members would have to waive any conversion gains in favor of a charity. Nationwide's status as the largest building society in the U.K. enhances its franchise. It benefits from a substantial and stable retail deposit base. Its level of nonretail funding remains low and funding flexibility is satisfactory. Nationwide revised its mortgage pricing policy in
