National & Provincial, Britain's ninth-largest building society, yesterday launched an aggressive drive for membership after announcing disappointing full-year figures, marred by an £11m provision for compensation on personal pension transfer advice and a collapse in net lending.

From 6 April, the society will offer members discounts on financial services and loans in an attempt to develop it customer base. The mutual interests initiative, which N&P claims will "give practical effect to the concept of mutuality". will offer benefits to around 1.7 million qualifying members.

All voting members will be eligible for the benefits, which include discounted personal loans, free or discounted insurance cover, share dealing incentives and extra interest on some savings accounts.

"When you are a member of an organisation, you expect to be able to deal with it on better terms than non-members. That is what this programme is seeking to achieve," said N&P chief executive Alastair Lyons.

It is unlikely that the initiative will bring N&P a significant amount of business. Instead it is being seen as a genuine attempt to enhance mutuality as well as develop cross-selling within N&P's customer base.

Rob Thomas, building societies analyst at UBS, said: "It is easy to be too cynical. It is true that a member must take a new product to benefit, but there were not many options. They could have distributed the profits to members but that would have weakened the organisation.''

Under building society legislation, only first-named mortgage and savings customers with at least £100 in their account at 31 December 1994 will qualify.

But N&P said that legislation preventing second-named account holders from benefiting from members' rights was unfair.

Full year pre-tax profits rose 10.9 per cent to £134m after a £22m reduction in provisions. Operating profits were down £9m to £180m, with the cost to income ratio rising from 45.6 per cent to 46.8 per cent. Net advances fell from £394m to £8m due to a high level of churning.