A rise in net interest income, a gain of £71m from the sale of the bank’s head office in London and the clawback of £70m of bad loan provisions made last year helped to boost Santander UK’s profit before tax to £751m, a rise of more than 400 per cent.
The banking net interest margin increased by 34 basis points from 1.53 per cent to 1.87 per cent while operating income rose from £1.8bn to £2.2bn.
Santander said although the recovery in the mortgage market had continued strongly in 2021, there were signs that activity was easing which would affect pricing on new mortgage lending, driving rates down.
Over 90 per cent of the bank’s customer balance sheet is secured, the majority of which is prime residential mortgages with an average loan to value of 42 per cent.
Nathan Bostock, chief executive, said: “We have delivered good growth in net interest income and strong mortgage lending. At the same time, we have continued to focus on enhancing our customer experience and improving efficiency.
“Looking ahead, while we are encouraged by the UK’s strong economic recovery, uncertainty remains as we enter a new phase in the pandemic.
“The strength of our business, underpinned by our prudent approach to risk, means we are well positioned to grow and to continue to support our customers, fulfilling our purpose to help people and businesses prosper.”
As the bank reports soaring profits and mortgage lending, deputy chief executive Tony Prestedge has announced his resignation and will leave with immediate effect.
Bostock’s departure as CEO was announced in April, with reports that he will move to a newly-created role in the wider Santander operation.
Following the sale of the London headquarters, Santander plans to invest in a new campus in Milton Keynes.
