The ratings on Nationwide Building Society reflect its position in the U.K. mortgage market, strengthened asset quality, improved efficiency, and solid capitalization. Underlying profitability remains satisfactory, despite the strategy of rewarding members through competitive pricing. Nationwide is committed to retaining its mutual status. Being the U.K.'s largest building society enhances Nationwide's franchise. It benefits from substantial and stable retail deposits and 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 solid, at 4.79% at April 4, 2003. Nationwide revised its mortgage pricing policy in 2001, offering existing borrowers the same rates as new customers. This initially reduced market share because other lenders offered discounts, but a
