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In a trading statement for the six months ending 20 June, chief executive of Coventry Building Society David Stewart said the lender's ability to attract and retain retail deposits meant it had maintained its ability to lend and increased its market share.

The statement said a 9 per cent growth in retail savings had been able to fully fund a 7 per cent growth in mortgage balances, totalling £851m.

Liquidity levels have been increased from 2 per cent at the end of 2007, to 23 per cent by the end of the first half of 2008.

Coventry has also maintained a mortgage arrears level of 0.58 per cent, less than half the industry average.

Stewart said: "We retain a high quality mortgage book and a very strong funding position. There's no doubt that market conditions will remain challenging for the rest of the year and our approach must continue to reflect this.

"Nevertheless, I believe we have the right business model for today's uncertain times."

Coventry's unaudited interim results will be released on 21 August.