Spanish banking giant Santander racked up a 70 per cent rise in half-year profits in the UK, but warned over a "material" hit to earnings from the Chancellor's new bank surcharge.
The lender's comments come after rivals Virgin Money and TSB both said earlier this month that George Osborne's plans for the new eight per cent surcharge announced in the summer budget would dent profits.
Santander UK bank saw pre-tax profit jump to £928 million in the first six months to the end of June as it boosted mortgage lending and added customers.
It said mortgage lending increased by £11.9 billion in the period, of which £2.3bn went to first time buyers.
Santander also added 660,000 new 123 account customers, with 169,200 of these customers switching from other lenders.
The bank said it was well placed to benefit from the UK's recovering economy.
Nathan Bostock, who took over from Ana Botin as UK chief executive last September, said: "We are well placed to benefit from the positive economic outlook, although future earnings will be impacted by the bank corporation tax surcharge announced in the recent UK budget.
"Nevertheless, I am confident that we can continue to grow the business, whilst maintaining balance sheet strength."
The bank also refused to be drawn on timings for the long-awaited flotation of its British arm.
Earlier this week the UK bank's chief financial officer Stephen Jones said he would leave the firm because of delays to the timetable of its stock market listing.
Mr Jones said: "I joined Santander UK in 2011 primarily to help prepare the company for an initial public offering.
"Given this will not now proceed in the near term, I have decided to take a career break and become reacquainted with my family."
The UK bank said it still plans to float in the medium term, and a final decision by its group board will take into consideration the changing shape of UK and European banking regulation.
The wider Santander group said its net profit for the period rose 17 per cent to €1.71bn (£1.2bn), driven by strong performances in the UK, Spain and Brazil.
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