KENT Reliance Building Society has smashed through the £1bn assets barrier for the first time.

Savers and borrowers with the Chatham-based society are being told in a circular letter that the society's phenomenal growth has continued throughout the past year.

Total assets have soared by 180 per cent in three years, with the September 30 figure standing at £1.03bn, up from £401m in 2001.

Growth has been powered by widening the member base across the UK and using the society's mutual status to offer attractive interest rates, often leading to table-topping performance and press headlines.

Kent Reliance is one of a dwindling band of traditional building societies - only 63 are left across the UK where once there were thousands - and has grown despite fierce competition from banks.

The society, which has also diversified into the Channel Islands, has slashed overheads by controversially outsourcing processing work to India and transferring Kent branches to new ownership.

Kent Reliance's costs of collection have fallen to 85p for every £100 of assets, and bosses aim to cut this to 50p over the next two or three years, with an ultimate goal of 25p.

Mike Lazenby, chief executive, said he wanted Kent Reliance to be the most cost-efficient society in the country and offering members the best rates. "We see it as part of our role to put the meaning back into mutuality," he said.

"If we can't offer a better deal than any other provider, then why are we doing it? We don't have an automatic right to be here.

"Building societies are synonymous with boredom, staying the same, old-fashioned and antiquated. We are refreshing mutuality and building societies for the 21st century."

He said the £1bn milestone was an amazing achievement that was unmatched in the marketplace. It had prompted other mutuals to seek its advice.

He said: "It's true to say the industry is becoming very interested in what we're doing and how we're doing it."

He ruled out any formal merger with another society, saying the costs would be too high. But he predicted an informal arrangement, with perhaps another mutual retaining it name and buying services from Kent Reliance.

The society made £2.4m pre-tax profit in the 12 months to September 30, a figure that Mr Lazenby wants to cut eventually to zero.

"We're not profit-driven, we need enough capital to fund the growth but profits per se is not what we are about, in the same way as growth is not what we're about. We are about having the lowest relative costs in the industry."

He believes more should be pumped back into member benefits, with the society's margin increasingly earned from selling services, software and intellectual capital to other mutuals.

"The ideal for us would be to have no margin at all, with everything going back to the members," he said.

Members will get their chance to talk about the society's latest results at the annual meeting at Buckmore Park, Chatham, on January 25, starting at 11am.