The society has blamed low interest rates for the fall in profits for the year to April 4.
Its share of the mortgage market has also fallen slightly to 8.7% from 9% in 2009.
Nationwide’s Base Mortgage Rate is guaranteed to be no more than 2% above base rate.
At 2.50% it estimates the cost of maintaining its BMR at this level relative to other rates charged in the market has been in excess of £450m over the past year.
It lent £12bn of mortgages last year and also reduced the minimum customer deposit for house purchase from 15% to 10%.
It had residential mortgage accounts more than three months in arrears of 0.68%, compared with 0.64% in 2009 – less than a third of the Council of Mortgage Lenders industry average of 2.22%.
Graham Beale, chief executive of Nationwide, says: “Over the year, many of our mortgage borrowers have enjoyed a very low Base Mortgage Rate and others have benefited from our pledge not to enforce the contractual tracker floor rate.
“I am encouraged to see that the new government intends to bring forward proposals to “foster diversity, promote mutuals and create a more competitive banking industry”.
“This is against a backdrop of public and political pressure on regulators to be seen to act decisively to prevent a repeat of the recent financial crisis. We support the objective of a more secure and stable framework for banking regulation.
“However, it is vital that this framework is developed with the interests of the mutual sector in mind. It must not undermine the competitive position of the sector, and must avoid the unintended consequences that may arise from a ’one size fits all’ approach to regulation. It is essential that we work together to protect building societies, and their members, for the future.”