SWINDON-based Nationwide Building Society has revealed a 40 per cent plunge in half-year profits after taking a hit from payment protection insurance (PPI) and ramping up investment despite tough market conditions.

The mutual posted pre-tax profits of £309 million for the six months to September 30, down from £516 million a year earlier.

Underlying pre-tax profits tumbled to £307 million from £460 million a year ago.

It booked a £36 million additional PPI compensation charge after a last-minute surge in claims before the August 31 deadline, taking its total bill for the half year to £52 million.

Joe Garner, chief executive of Nationwide, said: "In line with our expectations, our profits were lower as we invested in meeting the needs of our members, in our service and in our future.

"As we announced in September, profits were also affected by an additional PPI charge."

He added: "We continued to grow our mortgages, deposits and current accounts, but at a more moderate pace, as we focus on broadening relationships with our members and helping to meet more of their financial needs."

Nationwide cautioned that difficult conditions in the retail banking sector, which has been weighed down by low interest rates and intense competition, were set to continue.

It said: "The UK's growth has slowed as a result of weaker global growth and Brexit uncertainty, but household spending has remained relatively solid and housing market activity broadly stable at subdued levels.

"Whilst the economic outlook remains uncertain, we expect the current low interest rates and competition in our core markets to continue."