It reported a profit before tax of £1.86bn for the full year, more than double the £508m it saw in the 12 months to December 2020.
It attributed this growth in profit to mortgage lending, higher mortgage early redemption charges and improved margins which reflected interest rate changes to its current accounts.
Santander said its surging profit was also a result of lower funding costs as well as credit impairment write-backs.
Its credit impairment write-backs totalled £233m, which was put back into the bank. This compares to a loss of £639m the year before when £488m was put aside due to the pandemic.
The bank also sold a £600m retail mortgage portfolio in August for a premium of £15.2m.
Lending spread
The bank’s spread of mortgage customers remained fairly flat on 2020 with the distribution of mortgages across different loan to value (LTV) tiers mirroring the previous year.
Slight dips were recorded across the 75 to 85 LTV per cent tiers, with the proportion of lending falling from 11 per cent to eight per cent.
Lending to borrowers requiring loans of 85 to 100 per cent LTV also fell from four per cent to two per cent.
Lending to those with larger amounts of equity rose. Between 50 to 75 per cent LTV, lending increased from 41 per cent to 45 per cent, while lending up to 50 per cent LTV saw an uptick of 44 per cent to 45 per cent.
Its first-time buyer base was flat at 20 per cent, while small increases were recorded in lending to home movers which rose from 42 per cent to 43 per cent and remortgagors which went up from 29 per cent to 31 per cent.
Santander’s buy-to-let lending took up an eight per cent share, up on seven per cent in 2020 and with a total balance of £14.9bn up from £11.6bn.
Outgoing chief executive Nathan Bostock said: “Thanks to the hard work of our staff across the UK, we have delivered another strong financial performance in a changeable and competitive environment. We have further cemented our position as the UK’s third largest mortgage lender, helping customers with £7.5bn of net mortgage lending, and attracted 19,000 new current account customers through our switcher campaign.
“At the same time, we have grown income, realised the savings from our investment programme and continued to simplify our operations. Our strategy means we are in good shape thanks to our prudent approach to risk, strong capital and resilient balance sheet and we are well placed to continue growing as the UK economy recovers.”
Bostock, whose departure was announced in November last year, said he felt “incredibly privileged to have led Santander UK over the past seven years” and was proud of the difference the bank had made to customers and communities in the UK.
“I would like to thank all my colleagues for their support and commitment, and I know that the bank will continue to go from strength to strength under the leadership of my successor Mike Regnier,” he added.
