Santander UK profits up 40% on the back of loans

Nathan Bostock warns of pressure on asset margins. Picture: Daniel Lynch

Nathan Bostock warns of pressure on asset margins. Picture: Daniel Lynch

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Santander UK forecast yesterday that the UK economic backdrop would support future growth after an improved trading performance that included a double‑digit rise in lending to small and mid-sized businesses.

However, Nathan Bostock, chief executive of the bank – one of Britain’s big five – said Santander UK remained “mindful” that future earnings “will be impacted by the bank corporation tax surcharge and increasing pressure on asset margins”.

It came as the UK subsidiary of the Spanish banking giant posted a 40 per cent leap in pre-tax profits to £1.42 billion for the nine months to September. That compared with a profit of £1.01bn in the same period of 2014.

Bostock, who became chief executive of Santander UK in September 2014 after being finance director of Royal Bank of Scotland, said the bank extended £6.8bn of new facilities to SMEs and mid-sized corporates in the latest period – a rise of 17 per cent.

Net lending to UK companies increased by £2.3bn to a total of £26.2bn. Third-quarter profits lifted to £496 million from £466m.

Bad debts also fell sharply to £52m in what Bostock said was a “favourable economic environment”. Meanwhile, net mortgage lending improved to £2.2bn, with a retention rate of about 80 per cent. Santander UK’s net interest margin rose two basis points to 1.84 per cent.

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