The UK's largest mutual says it is "punching well above its weight"

It said pre-tax profits were �244.9m in the six months to 4 October, up from �188.4m in the same period in 2003.

Net mortgage lending was at �7.4bn - a 13.7% share of the market.

Looking ahead, it added it expected the house market to slow - warning prices would rise by a maximum 5% or possibly stop rising altogether for a while.

'No crash'

"It's going to be in the nought to 5% category," said Stuart Bernau, commercial and treasury director at the UK's largest mutual.

"We believe it will bump along in a slightly positive way but more neutral.

"We don't believe there is going to be a crash but there has been a change in the market," he added.

In our core markets of mortgages, retail savings and banking services we continue to punch well above our weight Philip Williamson, Nationwide

The forecast is consistent with the building society's prediction last month of "subdued" growth in the house market, after it unveiled a 0.4% drop in prices during October.

It will release a more-detailed forecast for 2005 later this month.

The comments were more bullish than those from the Bank of England recently which warned that house price inflation would slow to zero.

Nationwide stopped giving special deals to new mortgage customers in 2001, which triggered a slump in lending as brokers stopped recommending its products.

'Punchy' performance

The society has rebuilt its share by cutting prices, attracting remortgage business and retaining existing customers.

"Our performance in the first half of the year has once again been first-class," chief executive Philip Williamson said.

"In our core markets of mortgages, retail savings and banking services we continue to punch well above our weight."

Nationwide said it now held an 8.6% share of the existing mortgages market, while mortgage arrear levels remained low with loans more than three months in arrears down 21% on a year earlier.

Elsewhere, Nationwide opened almost 300,000 new current accounts and increased gross personal lending by 37% to �542m, Nationwide added.

And gross credit card openings totalled 114,000 during the period, taking the total number of credit card accounts to 742,000.