SANTANDER increased net lending to small companies in Scotland by 65% to £175 million during 2012 as the UK arm of the Spanish bank saw pre-tax profit remain stable at £1.2 billion.
Santander took a £55m provision for costs arising from its decision to pull out of a £1.7bn deal to buy 318 branches from Royal Bank of Scotland in September.
But a squeeze on margins from low interest rates and rising bad debts were offset by cost-cutting and the impact of a debt buy-back.
It also benefited from the absence of a £751m charge to cover payment protection insurance mis-selling compensation in 2011.
In 2012, Santander UK took a £232m provision relating to retail products and to interest rate derivatives sold to corporates.
Santander has made a drive into the Scottish business market as part- nationalised Royal Bank of Scotland and Lloyds Banking Group, owner of Bank of Scotland, seek to slim down balance sheets.
Its net lending to UK companies rose by £700m in the year as its corporate banking book grew to £19.6bn from 18.9bn.
Lending to small and medium-sized enterprises rose from £9bn to £10.6bn.
As interest rates remained low, Santander's net income margin, the gap between the amount charged on loans and paid out on deposits fell 23% to 1.44%. This led to a 5% fall in operating income.
Bad debts were up in both mortgage lending and business banking with non-performing loans accounting for 2.17% of assets at the year-end.
Chief executive Ana Botin said: "We look forward to greater regulatory clarity, regarding capital, liquidity, conduct and governance, as this will provide us with the certainty we need to continue to support the UK economy."
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules hereComments are closed on this article