Santander profits climb 11% in the UK

High street banking giant Santander reported an 11% hike in UK annual profits today, but revealed the pressure of intense competition for mortgages and savings business.

The group, which has snapped up a raft of UK players such as Alliance & Leicester and Abbey in recent years, said net mortgage lending – new loans less redemptions – fell 27% in 2010, while savings deposits plunged by more than a third.

It grew pre-tax trading profits in the UK to £2.3bn (€2.7bn), but it warned that banking margins were being hit as it faces increasing costs to attract savings and meet new regulatory requirements.

Despite the challenges, its UK arm helped offset an even tougher market for the wider Spanish group, which saw bad debt charges drag annual profits down by 8.5% to €8.18bn.