Santander reveals UK profit of £991m

Santander has reported an annual UK profit of £991m for 2008, an increase of 21% from 2007 levels.

Its loan book grew 43% to £179.74bn, with the Alliance & Leicester takeover accounting for £51.6m.

Combined with its purchase of Bradford & Bingley’s deposit business and branches, Santander says the combined acquisitions give it a market share of 10% in deposits and 13% in mortgages in the United Kingdom.

Abbey has become the second largest bank by mortgages and the third by deposits, with 1,300 branches and 25 million customers.

Deposits surged by 52% following the acquisitions of both A&L in July and Bradford & Bingley in September.

Mortgage activity rose by 10% over the year in Abbey,to a balance of £121.5bn This figure rises to £159bn with A&L’s mortgage book.

Abbey’s net mortgage lending totalled £11.1bn. Total net mortgage lending in the UK was £40bn in 2008, giving the Santander brand a 28% net mortgage share.

But this compares against favourably against the bank’s European counterparts, which as at September last year had a default rate of 2.76%.

Abbey had a default rate of 0.77% as at September 2008 compared to a UK industry average – as compiled by the Council of Mortgage Lenders – of 1.44%.

Capital ratios are also strong, with the banking giant recording a core capital of 7.23%. The bank’s capital reserves were also boosted by a rights issue last year which saw its equity capital increase by £6.22bn.

In a statement it says: “These results were obtained against a very difficult economic and financial backdrop, during which a large number of global financial institutions in Santander’s peer group have registered losses and required public support.

“In this environment, Santander has carried out significant acquisitions, such as that of Alliance & Leicester and Bradford and Bingley’s deposits and distribution channels in the UK.”