BUILDING society members are likely to get better value over coming years as competition drives down net margins.

Societies are having to increase their savings rates while simultaneously reducing their mortgage rates.

Consequently their net margins - the difference between savings and mortgage rates - are likely to drop to around 1.2 per cent next year, it is predicted.

Net margins could fall as far 1.0 per cent, forecasts Robert Sharpe, chief executive of the Bournemouth-based Portman Building Society.

"The market is becoming very, very competitive," he told DCCI Executive Club members and guests at the Dormy Hotel, Ferndown.

Portman's margin was 1.45 per cent in 1999. That was lower than former societies that have converted to banks like Abbey National (2.45 per cent); Alliance & Leicester (1.61 per cent) and Halifax (2.25 per cent) although Northern Rock's was fractionally lower at 1.42 per cent.

The society is due to reach the £7 billion asset mark by the end of the year. It is poised to become the fourth largest society in Britain when Bradford & Bingley converts.

Portman has 1.25 million members across the South with 15 per cent of them in its Dorset heartland. The society employs 1,300 staff, 778 of them in Dorset. Of those 778, some 620 carry out head office tasks while 158 are based in the county's 20 branches.

The 620 are currently based in six temporary offices around the town centre pending completion of the society's new HQ on Richmond Hill.

Portman's new HQ is due to open in April/May 2001. Work is over a month behind schedule.

Delays are the result of extra strengthening work which had to be carried out by the main contractor Kvaerner.

The extra strengthening was needed when the demolition of the old Portman building revealed the foundations of the original hotel that had occupied the site.

Portman is also continuing to upgrade its branch network. The 114-branch society has been refurbishing them or moving to better locations.

Its newest branch will open in Canford Cliffs in January, replacing an existing smaller office.

Portman recently announced that it would be sponsoring the BSO for another three years.