The ratings on Nationwide Building Society reflect its position in the U.K. mortgage market, strengthened asset quality, improved operating efficiency, and good capitalization. Underlying profitability remains satisfactory, despite the strategy of rewarding members through competitive pricing, reflecting Nationwide's commitment to retain its mutual status. In 1998, Nationwide voted to remain mutual. Membership conditions revised in 1997 mean new members have to waive any conversion gains in favor of a charity. Nationwide's status as the U.K.'s largest building society enhances its franchise. It benefits from a substantial and stable retail deposit base. Nonretail funding remains low and funding flexibility is satisfactory. Nationwide revised its mortgage pricing policy in 2001, offering existing borrowers the same rates as new customers. This led to
