SPANISH banking giant Santander yesterday reported that UK half-year, pre-tax profit jumped to £929m from £545m in the period to June 2014.
However, it warned of increasing competition in the British lending market as continuing low interest rates encouraged institutions to cut loan costs as they battle for customers.
In a half-year report for its UK business, which the Spanish bank set up after buying Abbey in 2004, Santander said: “We anticipate that the UK economy will continue to be supportive of our business.
“There is evidence of increasing liquidity in the lending market resulting in competitive pressures in many business lines, which may impact new asset margins. We also expect the implementation costs of regulatory reform to increase significantly in the months ahead as we evolve our new operating models to address ring fencing requirements.”
The Spanish bank added that its UK net interest margin was set to be flat on 2014 at 1.8 per cent, as competitive pressures on lending margins were offset by improvement in margins on deposits.
Net interest income rose to £1.8bn from £1.7bn the year before.
Gross mortgage lending was £11.9bn.
It added: “During the first half of 2015, we extended £4.5bn of new facilities to SMEs and mid-sized corporates, an increase of 15 per cent on the first half of 2014.”