Santander

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Santander UK Posts 15% Rise In Pretax Profit On Higher Margins

By Margot Patrick
Of DOW JONES NEWSWIRES

LONDON (Dow Jones)--Santander UK posted a 15% rise in 2010 pretax profit, to EUR2.72 billion (GBP2.32 billion), as the U.K. arm of Spain's Banco Santander SA (STD) scooped up market share in small-business loans and attracted new depositors.

The bank, which is preparing a float of its business on the London Stock Exchange this year, is the first of the major U.K. banks to report results for the full year. It gave an upbeat snapshot of the U.K. banking market, saying fewer mortgage customers are falling behind in their payments and that it is making more loans to small businesses.

Santander UK is among the country's major banks to have been asked by the government to step up their small-business lending this year, in an effort to help revive the economy.

Profit rose in the year because of higher lending margins that fed through to a 13% rise in net interest income, and from lower provisions for loan losses.

But while customers in mortgage arrears reduced, the bank's non-performing loan ratio rose in the year, to 1.76% from 1.71%. The bank also said that gains from healthy new business activity were being partially eroded by higher costs of funding and the need to hold more cash for regulatory requirements.

Mortgage lending volume slipped from 2009, on both a net and gross basis, reflecting rocky conditions in the U.K. housing market that have cut into sales activity, as well as the effect of customers moving to repay existing loans before interest rates rise. Santander UK's net mortgage lending in the year was GBP5.5 billion, down 27% from GBP7.6 billion in 2009. Gross mortgage lending was GBP24.2 billion, down 8% from GBP26.4 billion.

Small business loans totaled GBP8.5 billion, up 26% on last year's GBP6.7 billion and giving Santander UK an estimated 3.6% market share. Market share had been around 2.7% in 2009.

"Santander UK delivered a strong performance in 2010, with a good flow of new business and a healthy uplift in profit despite a challenging trading environment," Chief Executive Officer Ana Botin said.

She said the bank entered 2011 "with confidence," and that it aims to further increase lending to U.K. businesses.

Botin took over the CEO job in December, after former CEO Antonio Horta-Osorio left for the top job at rival Lloyds Banking Group PLC (LYG).

The U.K. contributed 18% to Banco Santander's group profit, second only to Brazil, with 25% and outstripping Santander's profits from Spanish retail customers. The bank attributes a further 9% of group profit to global business conducted from Europe.

(END) Dow Jones Newswires

February 03, 2011 04:23 ET (09:23 GMT)

ChrisEvanson

Applied for a Santander personal loan (despite my reservations but they were offering the best rate and I thought 'surely I cant have problems borrowing money from them???' 31 Jan. Email notification straight away promising document in post to sign immediately by next post. Nothing received by yesterday (3rd Feb) so phoned them. Was told 'sorry we cant access online applications at the moment, can you call back later?'

Forget it Santander. Have taken a loan out with Zopa instead. Sorted online and with an email and phone call in less than 12 hours. Money on its way.

IronWolf

When I transfer from HSBC online, its done within 10 minutes.

When I transfer from Santander it takes min 2 days.

I'd agree that Santander are really low quality, and I have to lol at

'well anyone can take money out of your account'

ChrisEvanson

When I transfer HSBC-Natwest it is instantaneous, so why does it take so long from Santander to either of these accounts?

Paperwork for loan arrived after a week. No good to me then. Ok so it may have been Royal Mail, but if Zopa can do it all online and with a phone call, I'm not sure why Santander can't.

jamesd

First Direct to Santander credit card payment took less time to arrive than it took me to log in to the credit card account to check, so they are fast sometimes. Not great for outgoing payments from bank accounts, though.