Santander reports 55% rise in profits

Santander branch, Daquella Manera, Flickr

The UK arms of Spanish banking giant Santander saw full-year profits leap 55% in 2009 thanks to its growing share of the mortgage market and more customers signing up to its bank accounts.

Pre-tax profits hit £1.54 billion for the year to 31 December, with new acquisitions Bradford & Bingley and Alliance & Leicester helping to boost UK deposits by 8%.

The banking behemoth, which is the second-largest bank in Europe by market value, continued to draw in savers with 1.1 million new bank accounts opened during the year – slightly above target. Existing mortgage customers were rewarded with its fee-free Zero account, which does not charge for using overdraft facilities and pays interest of up to 6%.

Santander now holds a 10% share of the UK retail banking market.

The bank also grew its share of the gross mortgage market to more than 18% - up from around 14% the previous year. Net home lending stood at £7.6 billion during the year.

It says its mortgage book is putting in a better-than-expected performance, with total arrears rate in the fourth quarter of 1.71%, up from 1.65% in the third quarter but down on the 2.4% reported for the same period by the Council of Mortgage Lenders.

Meanwhile, lending to small and medium size businesses is up 16% on the same point last year.

António Horta-Osório, chief executive of Santander UK, says: "Our full-year results demonstrate clearly our business model and strategy are delivering superior results, allowing us to increase profits and revenues, balanced against controlled costs and prudent lending."

Bradford & Bingley has now been fully integrated into its UK product range, while the rebranding of Alliance & Leicester is on track to be completed in the fourth quarter. It remains on target to deliver the £180 million of cost savings by 2011.

More about