He said: "Conversion does not create wealth. It is like a conjuror pulling rabbits out of a hat. We are all amused by the trick but no one believes he has created anything. The societies that have become banks have spent pounds 500m of their customers' money on the conversions."
Profits at Nationwide slumped last year as it carried out its promise of returning pounds 200m to its members through keener savings and mortgage rates than its demutualising peers. Mr Davis said: "Our competitors would love us to convert but we intend to stay on as a building society and bring them increasing competition."
The society said it had returned the funds while improving its balance sheet strength, improving its efficiency and increasing its share of the mortgage lending market. It was confident that record would allow it to see off a challenge at its annual meeting from a group of carpet- bagging dissidents. The rebels are attempting to have five of their number appointed to Nationwide's board and to push through a flotation or takeover of the society. They are promising members handouts of at least pounds 1,000.
Nationwide announced 18 months ago it was committed to remaining a mutual society and yesterday restated its intention to put the interests of customers first. With more than 7 million customers and 685 branches, Nationwide is the country's leading building society following the flotation of Halifax.
Announcing pre-tax profits of pounds 264.8m for the year to April, a 33 per cent reduction on the previous year's pounds 395.6m, Mr Davis spoke out strongly for the mutual movement: "We can occasionally look beyond personal greed and are committed to rewarding our customers with tangible long-term benefits. Over a period which has seen many institutions abandoning their mutual status, I am delighted with the role Nationwide has played in preserving real choice and competition."
Mr Davis said the attractions of the Nationwide offer had been made clear since the release of funds that had been locked into rival societies in the run-up to their flotations. Around pounds 700m of savings had flowed into Nationwide accounts in May. The average deposit of pounds 11,000 suggested savers were not carpet-baggers seeking the next windfall, Mr Davis said.Reuse content