BANKING group Santander unveiled a 40 per cent slide in annual UK profits yesterday in what it branded a “tough” trading climate.
The Spanish bank highlighted its success in lending to small businesses, but had nothing to say about its proposed flotation of the UK division.
Instead, chief executive Ana Botin warned that 2012 was likely to be “a tough year for the UK bank industry”. She added: “Economic prospects have deteriorated markedly even in recent months.”
Analysts said it was unlikely the bank would bring forward the proposed flotation, understood to have been pencilled in for 2013 at the earliest, given the economic pressures.
One said: “I think a float remains distant. It was a pretty miserable outlook statement from Santander, including pressure on revenues and its belief UK unemployment will peak at about 9 per cent this year. That is probably not the backdrop to get a decent flotation price.”
Santander revealed it grew net lending in Scotland by 41 per cent in 2011, while new gross lending north of the border totalled £98 million.
The bank revealed its UK arm lent £4.3 billion to SMEs, which outstripped its £4bn target in the Project Merlin deal with the Treasury.
UK lending to SMEs lifted 25 per cent, and the bank’s market share in the sector rose to 4.3 per cent from 3.6 per cent in 2010.
Santander opened five corporate lending centres last year, including one in Edinburgh, bringing its total in the UK to 28. In addition, the group hired an extra 200 SME business advisers.
Despite the inroads by Santander into the dominant small business lending position of rivals Royal Bank of Scotland, Lloyds, HSBC and Barclays, its profits fell to £993m after a £538m provision for mis-selling payment protection insurance (PPI).
Stripping out PPI, Santander’s underlying profits fell 6 per cent to £1.5bn as the bank said margins were squeezed by the extra costs of financial regulation, including the government’s bank levy.
However, the group’s bad debts fell 38 per cent, while its gross mortgage lending to UK households was 17.3 per cent, meaning it is now writing about one in every six UK mortgages.
Following the political controversy that led to RBS chief executive Stephen Hester waiving his near‑£1m bonus, there was no news on payouts at Santander.
A spokesman said: “There has been no decision on bonuses yet.
It will be made in a few weeks.” Botin got a bonus of £1.4m in 2010, despite the group being named the worst bank on the UK high street for service that year.