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Santander's profits tank as lending dips 25 April 2013

Santander has announced a 25.9% drop in profits in its Q1 2013 results statement after lending revenue declined.

The Spanish-based banking group announced net profits of €1.2 billion (£1.6 billion), down from €1.6 billion for the same period in 2012, with UK pre-tax profits falling to £282m, from £363m year on year.

Ana Botin, chief executive of Santander UK plc, said the UK market remained subdued but anticipated “greater stability in the operating environment.”

Santander’s SME lending figures for Q1 2013 rose to £10.7 billion from £9.3 billion year on year, a 15% increase, 1% higher than Q4 2012 figures.

Botin said: “We increased our SME lending 15% year on year and invested further in the development of our corporate banking capabilities.”

Net interest income increased 27% as a result of increased SME and large corporate lending, as well as the impact of higher new business margins.

Customer loans fell to £2.3 billion for Q1 2013, which the company said reflected a managed reduction in the residential mortgage portfolio, partially offset by increases in SME and corporate lending.

The company said it has developed its capacity to service SMEs, with more customer-facing staff in its growing regional Corporate Business Centre network.

Corporate banking will remain Santander’s key investment and development focus until at least 2015, as it aims to become the “SME bank of choice.”

Its SME market share increased to 5.3% during Q1 2013 compared to Q1 2012’s figure of 4.7%.

Santander’s UK operations remain focused on the domestic market, with 98% of customer assets UK-related, and 84% of customer loans consisting of prime UK residential mortgages.

Botin said: “We will continue our support of UK individuals, families and businesses and to act as a strong competitor on the high street.”



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