Santander’s 2011 mortgage lending down 2% despite boost in H2

Santander’s gross mortgage lending for 2011 totalled £23.7bn, 2% lower than the £24.2bn it lent in 2010, the bank’s results have revealed.

The lender recovered from a weaker first half of 2011, in which it lent £9.7bn, to record gross lending of £14bn in the second half of the year, an increase of 44% between the two six-month periods.

Its market share of gross mortgage lending was 17.3% in 2011, down slightly from 17.7% in 2010.

But the bank’s net mortgage lending fell by a whopping 80% from £5.5bn in 2010 to just £1.1bn in 2011.This resulted from net lending falling to -£400m in H1 2011, but it managed to claw this back in H2 with net lending rising to £1.5bn.

Santander’s average LTV was 65% on new mortgage loans in 2011, while the average LTV on its books was 52%. Both measures have remained broadly stable throughout 2010 and 2011.

The bank’s trading profit after tax was £1.5bn in 2011, down 6% on the previous year, which it puts down to higher regulatory and liquidity costs.

It says that taking into account a provision of £538m for payment protection insurance claims, which was reported in its half year results, its attributable profit to the group after tax was £993m, down 40% on 2010.

Ana Botin, chief executive officer of Santander UK, says: “Santander UK has delivered a solid performance in 2011 despite challenging market conditions, maintaining the strong underlying track record of its business while strengthening the balance sheet.

“Overall profitability declined, albeit trading profit after tax excluding regulatory impacts increased by 9% compared to 2010.

“The result demonstrated the robust nature of our business, with strong growth in SME lending and maintaining our established market positions in mortgages and savings. Our results also benefited from a good credit performance, built around our prime UK mortgage book.”

She adds that 2012 will be a tough year for the UK banking industry, with increasing regulatory burdens and funding costs, and therefore Santander will continue to focus on building its balance sheet strength and stability.