Santander has seen its gross mortgage lending rise by 43 per cent over the year, while profits before tax were up by just over a quarter.
Its results for 2014, published today (3 February) revealed that gross mortgage lending hit £26.3bn. A total of £5.6bn was handed to first-time buyers, while £1.2bn went to Help to Buy customers.
Profits before tax were also up 26 per cent on 2013 to £1.4bn.
Looking to the year ahead, Santander anticipates the bank base rate will increase to 0.75 per cent later in 2015. Reduced mortgage stock margins and new lending margin pressures in the second half of 2014, on both mortgages and corporate loans, are unlikely to improve, the lender predicted.
According to bosses, these pressures are likely to be largely offset by a continued improvement in retail deposit margins.
They also expect the decline in standard variable rate mortgage balances - which reduced by a net £8.4bn in 2014 - to continue, but at a slightly slower pace in 2015.
Last year the average loan-to-value on new lending was 65 per cent, including Help to Buy, and 47 per cent on the stock of mortgages.
Help to Buy comprised all of the lending with an LTV over 90 per cent, with demand in 2014 being higher than expected.
Excluding Help to Buy, the average LTV on new lending was 64 per cent, and on lending with an LTV of more than 85 per cent, it was 13 per cent of the new business flow.
Furthermore, the remaining provision for payment protection insurance redress and related costs amounted to £129m, including £95m of additional provisions made last year.
The additional provisions were taken following a recent review of claims activity, which indicated that claims are expected to “continue for longer than originally anticipated”. Monthly redress costs decreased to an average of £11m per month, compared to a monthly average of £18m in 2013.
Nathan Bostock, chief executive of Santander, said the results saw continued improvement in profitability and strong commercial momentum. “The UK economy improved during 2014 and will, we believe, continue to be supportive of our business in 2015.”