Nationwide, Britain's biggest customer-owned financial services group, said today that it expected market conditions to remain difficult due to Europe's ongoing debt crisis, as it reported higher underlying interim profits.

Nationwide, which specialises in mortgages and savings, said its underlying pre-tax profit for the six months ending September had risen 17 per cent from a year ago to £172 million (€199 million).

"Market conditions are likely to remain difficult until the economy in the UK is more certain and the financial crisis in the eurozone is resolved," chief executive Graham Beale said in a statement.

"Despite the uncertainties, I am confident that we can continue to invest in the business, deliver more products and services to more customers and deliver our strategic vision of being the UK's leading provider of retail financial services," he added.

Nationwide expected UK interest rates to remain on hold for an extended period, with any increase in rates not expected until 2013.

Reuters