Strong mortgage lending boosted Santander’s profits in the first half of this year as demand in the UK housing market soared.
Profits before tax at the lender were up more than fivefold to £751m, up from £148m in the same period last year.
Higher net-interest income – the difference between what a bank receives from interest on loans and pays out on deposits – drove operating income 23 per cent higher in the first six months of the year, up to £2.2bn from £1.8bn in the first half of 2020.
Santander followed the lead of other banks to release £70m in loan loss provisions set aside at the height of the pandemic to offset an anticipated wave of defaults.
The lender’s CET1 capital ratio, a measure of a bank’s strength, strengthened 0.3 percentage points to 15.5 per cent.
Nathan Bostock, chief executive officer, said: “we have delivered another strong financial performance while continuing to support our customers, colleagues and communities through the challenges of the pandemic. The results are testament to the hard work of our teams and reflect the strategic decisions we have taken over recent years as well as the economic recovery.
“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.
Customer deposits swelled by over £3bn over the last year, reflecting the trend toward increasing savings contributions amid the economic shutdown to curb the spread of Covid among households.
The bank noted that appetite for credit was weak in the first half of the year and is likely to remain surpressed if the UK economy continues to rebound strongly from the pandemic.