The ratings on Nationwide Building Society reflect its position in the U.K. mortgage market, strengthened asset quality, improved efficiency, and satisfactory capitalization. Underlying profitability remains satisfactory, despite the strategy of rewarding members through competitive pricing. Nationwide is committed to retain its mutual status. Membership conditions were revised in 1997 so that members who have joined since then waive potential conversion gains in favor of a charity. Being the U.K.'s largest building society enhances Nationwide's franchise. It benefits from substantial and stable retail deposits. Funding flexibility is satisfactory. Asset quality has improved over the past decade, reflecting a relatively conservative lending policy. Adjusted common equity-to-adjusted assets remains good, at 5.0% at Oct. 4, 2002. Nationwide revised its mortgage pricing policy in
