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Santander UK posts £875m profit - 29/07/2010

Santander UK has posted £875m profits for the first half of 2010, while the stock of properties in possession on its balance sheet remains at just 0.06 per cent.

In a trading update this morning, Santander’s UK business said it will recruit 600 jobs to support growth in the second half of 2010 and that its lending to small and medium-sized enterprises (SMEs) increased more than 20 per cent in the first half of 2010.

The bank said the non-performing loan ratio on its mortgages increased to 1.42 per cent, from 1.34 per cent in the second quarter of 2009, while average losses on repossessed properties reduced as house prices increased.

Collection schemes, the bank said, including refinancing and low interest rates, continued to support stable arrears levels and low volumes of properties in possession.

António Horta-Osório, chief executive of Santander UK, said: "Santander UK has had a strong first-half performance with profit and revenues up and costs flat on the same period last year."

Santander’s trading update also reveals the huge scale on which it is now operating, following its acquisition of hundreds of Bradford & Bingley branches and the integration with Alliance & Leicester, which it bought out in 2008.

Santander now has 1,300 branches and 25 regional banking centres in the UK. The bank has seen 519,000 new bank account openings from January to June 2010 and the company is on track to open one million new accounts for the second year running. Credit card sales, at 239,000 were 31 per cent higher year on year.

Santander’s gross mortgage lending in the first half of 2010 was £12.3bn, a 12 per cent rise, securing a gross market share of nearly 20 per cent. Its net mortgage lending was £3.3bn, a rise of 67 per cent on £2bn during the first half of 2009.

SME lending was up 21 per cent to £7.5bn, from £6.2bn as at June 2009.

Santander now plans to grow its UK business predominantly in the SME sector, through its regional centres, and to large corporate businesses where it said it is benefiting from firms’ desire to have a "multi" rather than single bank relationship.

Horta-Osório added: "We have had growth across all areas of the business demonstrating that our transformation into a full-service commercial bank is progressing successfully.

"Santander provided one in five UK mortgages and increased our lending to SMEs by over 20 per cent, albeit from a small market share."