The Britannia Building Society unveiled higher half-year profits of £70 million.

It also announced it had handed back £40 million to members in the form of better interest rates and a loyalty bonus in the past six months.

Chief executive Graham Stow said the society was making good progress in expanding its operations outside the sphere of savings and loans.

In the past six months income from these operations has risen 14 per cent to £32.1 million, boosted by healthy sales of investment products and cross-selling of homes and buildings insurance and personal loans.

Group pre-tax profits in the six months to June 30 rose to £70.2 million from £63.7 million in the corresponding period last year, though the 1999 figure was depressed by exceptional charges of £9.2 million.

Mr Stow said the society's Homesaver product, which helps first-time buyers save for their deposit, had been well received, and a £40 million programme of investment was under way to replace all core IT systems.

Britannia has 2.1 million members and assets of £14 billion and is Britain's third biggest building society.