Tax Changes will lead to Nationwide Budget lending of £6.8bn.

It said changes to banking taxes announced in July's Budget would cost the equivalent of the capital needed to support £10bn of lending.

The building society added that in the three months to 30 June, profits rose to £379m from £253m a year earlier.

 

Chief executive Graham Beale said the financial year had "started strongly".

"Nationwide accounted for more than a quarter of total net lending to the UK housing market," he said.

He added that Nationwide's gross mortgage lending had increased by 17.2% to £6.8bn and net lending was up 23.5% to £2.1bn.

But the firm warned that changes to the bank levy and the introduction of a tax surcharge on banks proposed in the Budget could hit its lending over five years, especially in the earlier years.

In July, Chancellor George Osborne announced that the annual levy banks pay on their balance sheets would be reduced gradually from 0.21% to 0.1%, but that an 8% surcharge on banks' profits would be introduced.

Mr Beale said that the tax surcharge might benefit major international banks in the UK, but it would have a disproportionate impact on building societies.

"This represents a missed opportunity to support diversity by acknowledging that building societies are different to banks and to recognise the contribution Nationwide and other mutuals make by lending to the UK economy, and the housing market in particular," he said.