The society's move will mean savings rates at least 0.25 per cent higher than its main competitors, Halifax, Woolwich, Alliance & Leicester and Northern Rock, which are about to become banks.
Bradford & Bingley also expects to maintain the existing 0.25 per cent gap in variable mortgage rates between itself and rivals. The society claimed that this step alone would give savings of pounds 900 spread over seven years compared to the de-mutualisers, to someone with a typical pounds 50,000 mortgage.
Unlike its previous loyalty package and that of other societies, Bradford & Bingley's will be set by pegging retained profits to about 5 per cent of its reserves, currently about pounds 1bn, with any excess profits handed back to members.
The bonus announcement came as Bradford & Bingley announced that its profits in 1996 dropped to pounds 56.6m compared with pounds 107.7m the previous year. The society claimed the reduction was largely caused by last year's loyalty package, which saw pounds 43m shared out between members.
Redundancy costs set the society back a further pounds 15m in 1996. A further pounds 20m reduction in pre-tax profits was caused by more conservative accounting procedures, taking the impact of special mortgage discounts and cashbacks in the 12 months after the loan is made rather than extending it over a longer period.
Bradford & Bingley's assets grew by 9 per cent to pounds 1.7bn, while its new residential mortgage advances grew by 55 per cent to pounds 2.8bn.
Christopher Rodrigues, chief executive at Bradford & Bingley, said: "We remain totally committed to mutuality because it makes better sense for our customers. The one-off benefit of plc conversion is here today, gone tomorrow."
Mr Rodrigues' comments came as Alliance & Leicester continued the inexorable move towards its own flotation on 21 April. Almost 2.5 million members will receive a special shareholders information pack in the next seven days, explaining the choices they have over what to do with their 250 free shares, worth an estimated pounds 1,200 each.
Norwich Union, the mutual insurer, is also expected to announce its own flotation plans later today.