Santander UK reported that its mortgage lending slumped by £4.4bn in the first half of the year, leading the bank’s profit to tumble by almost a third.  

The UK arm of the Spanish lender said it had taken action to “prioritise profitability” over the first six months, which resulted in lower mortgage lending as well as customer deposits falling by £5.6bn in the period.  

It’s mortgage loan book stood at £170.8bn at the end of June. 

However, the business added that it “saw improved new business margins and gross lending in the second quarter,” in a stock market statement.   

Although the bank “now forecasts two bank rate cuts rather than three later in 2024”.  

The Bank of England’s base rate has remained at a 16-year high of 5.25% since last August, despite inflation returning to its 2% target.    

Santander UK posted a first-half pre-tax profit down 31% drop to £804m, as lenders have seen profits cut back this year from sizeable returns seen over the past two years, as the base rate has stabilised and competition in the mortgage and savings market increases.  

Santander UK chief executive Mike Regnier says: “Our first half financial results were in line with our expectations, with a more positive trajectory reflecting improvements in the second quarter.”  

Regnier added: “We’re also offering competitive savings rates and improved access to mortgage financing.”  

The lender said credit impairment charges fell 43% in the first half due to an improved outlook for the wider UK economy.  

Lloyds Banking Group and NatWest will post interim figures on Thursday and Friday, respectively.