In its full year results, Santander lent £24.2bn in 2010, compared to 26.4bn in 2009.
In the first half of 2010, Santander lent £12.3bn to borrowers, but that number dropped to £11.9bn in the second half.
A spokesman for Santander UK said: “Despite the drop in gross mortgage lending, we are still lending more than our stock share which has gone up by 0.4% to 13.9%.”
He added that the small drop in lending for the second half of the year was a result of the Comprehensive Spending Review influencing people’s decision to remortgage or purchase property, and the adverse weather conditions.
Net mortgage lending also slipped by 27% from £7.6bn to £5.5bn in 2010 while SME lending stock rose by 26% to £8.5bn in 2010, giving Santander UK an estimated 3.6% market share.
“Our business to small business and enterprises was driven largely by opening up 25 regional banking centres. We are also working towards completing the acquisition of 318 RBS branches, a key step in fulfilling our ambition to be a full self-service commercial bank,” he added.
Despite the drop in lending, the group reported that its profit after tax rose by 11% to £1,701bn last year.
Around 80% of Santander UK’s business was done by brokers in 2010, with the lender expected to continue to use more brokers throughout 2011.
Ana Botin, Santander’s new chief executive officer (pictured), said: “Santander UK delivered a strong performance in 2010, with a good flow of new business and a healthy uplift in profit despite a challenging trading environment,”
She said the bank entered 2011 “with confidence,” and that it aims to further increase lending to UK business this year.