The lender’s loan book rose from £169bn in December to £204.7bn, mainly due to its acquisition of TSB, which completed in May and added £339.bn to its book. This also increased because of higher gross lending.
Its borrower profile mix was fairly stable compared to the end of last year, with homemovers accounting for 40% of business, down from 42% in December, and remortgagors representing 31% of its book, up from 28%.
First-time buyers made up a fifth of its book, down from 21%, while buy-to-let (BTL) business stayed flat at 9%.
The average loan to value (LTV) of its mortgage book moved from 52% to 53%, while the average LTV of its new business rose marginally from 65% to 66%.
Some 91% of Santander’s mortgage borrowers were on a fixed rate mortgage, down from 92% in December, and there was a slight rise in the share of borrowers on a standard variable rate (SVR), rising from 1% to 2%.
Are your clients ready for the first Making Tax Digital reporting deadline?
Sponsored by BM Solutions
The share of mortgages in arrears of 90 days or more fell from 0.65% of the bank’s mortgage book to 0.54%.
Santander reported a 31% fall in its half-year pre-tax profit from £764m to £528m, which it attributed to an impairment charge in the first quarter relating to historical motor finance commission payments and higher restructuring costs.
TSB also had a loss before tax of £25m due to a day one credit impairment charge of £62m.
Santander increased its credit impairment charge by £173m to £278m, which it attributed to the acquisition of TSB and the day one credit impairment charge.
The bank said its credit impairment charges also increased due to a deterioration in the economic outlook reflecting recent events in the global economy.
Its post-tax profit fell 32% to £385m.
The bank’s net interest income rose 8% to £2.4bn, primarily because of the inclusion of TSB’s higher net interest margin. Its overall net interest margin fell marginally from 2.26% to 2.25%.
Mahesh Aditya, chief executive of Santander UK, said the bank welcomed four million customers and 4,500 colleagues to its business following the completion of the TSB acquisition, making it the UK’s third-largest bank by personal current accounts and fourth-largest mortgage lender.
Santander’s financial report said the bank’s front-line teams were using tailored artificial intelligence (AI) solutions for customer phone calls.
Aditya continued: “Our H1-26 results show good business performance, with continued net lending growth as well as increased efficiency, driven by simplification and automation.
“As we integrate TSB with Santander UK, our ambition for customers is to combine leading digital services with the personal support they value, helping us to create the best bank for customers in the UK.”
