Santander reports rise in lending

Santander has reported a £2 billion increase in total mortgage lending

Abbey and Alliance & Leicester owner Santander has revealed that it met Government demands to free up credit with an increase in half-year lending to businesses and homeowners.

The Spanish bank, which also owns Bradford & Bingley's savings arm after a buying spree last year, reported a £2 billion increase in total mortgage lending and a 13% hike in loans to small businesses in the six months to June 30.

Chancellor Alistair Darling met bank chiefs this week in a bid to get tough over the ongoing lack of finance available to firms and individuals.

Santander revealed its share of the UK mortgage market rose to 16.3% as total mortgage lending increased 1% to £161.2 billion.

Net mortgage lending - gross lending less redemptions - shrank by a hefty 67% to £2 billion in the first six months of the year, but a positive net lending figure is expected to have bucked the trend in the wider market.

Profits growth in the UK of more than 30% to £790 million in the six months to June 30 is also set to outstrip many rivals.

Santander is the first UK bank out of the blocks in this year's interim reporting season, in what is forecast to show a further retrenchment in lending across the industry.

Mr Darling hauled bank bosses - including Santander's UK chief executive Antonio Horta-Osorio - into a meeting on Monday to look at whether the industry was doing enough to boost lending.

They were warned to expect high levels of scrutiny to ensure businesses were given the lowest possible interest rates on borrowing amid fears the ongoing lending clampdown is holding back economic recovery.

But Santander assured lending to business was a "priority area" as it reported a 3% rise in overall loans to firms, to £19.7 billion.