The UK lender, owned by Spanish parent Banco Santander, wrote home loans valued at £167.2bn last year compared to £175.2bn over the previous 12 months, it said in a fourth quarter management statement.

However, the bank expects mortgage margins to improve this year.

It said: “With more attractive lending margins in the mortgage market, we anticipate a gradual return to net lending growth in 2025.”

The lender added that it was “well positioned for Bank rate reductions”.

The Bank of England’s rate-setting Monetary Policy Committee is widely expected to cut the interest rate, currently at 4.75%, by 0.25% when it meets for the first time this year on Thursday.

Overall, Santander reported a 38% drop in pre-tax profits to £1.3bn for 2024 after taking a hit from provisions for possible motor finance mis-selling and higher savings rates.

Santander UK chief executive Mike Regnier said: “Looking ahead to 2025, our strategy of disciplined pricing over the last year means we are now well positioned to benefit from improving mortgage margins and reductions in the cost of funding and deposits.

“While challenges remain, and there have been mixed signals about the UK’s recent economic performance, the outlook for our business has improved.”

Over the weekend, Banco Santander’s global head Ana Botin slammed reports that it is looking for a buyer for its UK bank, saying, ” It is not for sale.”

Her comments came after multiple reports emerged last month that the Spanish lender is in the early stages of exploring several strategic options, one of which is exiting the UK.

The parent lender is understood to be unhappy with onerous ringfencing rules brought in after the 2008 financial crisis, which require UK high street lenders to keep these units separate from other investment operations.

Also, last month Santander UK said that its chair William Vereker would step down later this year.

But Botin said: “The UK is not for sale. We love the UK and the UK will remain a core market.”