26/08/2011

By Steve Pateman, Executive Director of Corporate, Commercial and Business Banking, Santander UK Plc


Businesses look for a lot of things in a bank: accessibility, strength, service. But most of all they need to know that the bank is well run; that it is focused on delivering long-term benefits to its customers and shareholders, and that the people at the top know what they are doing. One way a bank can demonstrate this is through its published financial results, and Santander recently posted results for the first half of 2011.

The results showed that the group as a whole made a profit of €3.5 billion. In the UK, we recorded pre-tax profits of £1,150 million, down 3% on the same period last year. So while that’s a healthy profit, it is down on last year’s figures. Why is this the case?

Well, there are a number of factors, but principally, the costs that we now have to carry as a bank are greater than they used to be. It’s partly down to regulatory changes — we have more on deposit at the Bank of England as well as complying with the new capital ratio requirements — that means the cost of money has gone up. Consequently, it squeezes our margins and this is reflected in the profits we posted recently.

Digging beneath the headline figures, there is a lot to be encouraged by. Firstly, our corporate business is delivering some seriously impressive figures, building on last year’s growth. We are adding around 250 business customers a month and corporate lending has increased by around 30%.

That, more than anything, is a clear sign we are getting it right in that space, posting that level of growth in a stagnant economy shows that more and more businesses are deciding we are offering what they need: relationship-led banking with an emphasis on taking time to understand our customers.

Meanwhile our retail banking division has held steady, which, given the extremely challenging conditions we face, we believe is a good result.

Overall, we should be encouraged by the results. There’s no doubt the economic and regulatory environment continues to throw up challenges, but we believe we are ideally placed to meet them head on whilst providing UK businesses with the financial support they need.

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