"Looking ahead, we expect to see a changeable and more challenging macro environment in 2017."
In its Quarterly Management Statement, Santander said strong net inflows were driven by BTL lending and lower redemptions.
However this was offset by "management pricing actions that impacted new mortgage approvals as we continue to focus on customer service".
Overall, the Bank recorded profit before tax of £1,914m, up 43% and adjusted profit before tax of £2,031m, up 13%.
But tax on profit rose by 57% to £597m with the effective tax rate up from 28% to 31%, driven by the 8% bank corporation tax surcharge and higher profits, partially offset by the tax impact of lower conduct provision charges in 2016.
Nathan Bostock, Chief Executive Officer, commented: “I am pleased to report a strong performance in 2016. We saw net lending growth across all three customer business segments, increased cost discipline and continued good credit quality – all supported by robust UK economic growth. We also continued to see the benefits of our innovative approach to enhancing our customers’ experience, with significant improvements to core digital services throughout the course of the year giving us one integrated platform which will allow us to understand and meet our customers’ needs better.
"Investing in new technology such as: Investment Hub; voice banking capabilities; end to end mortgage digital application process; and working capital loan solutions that give SMEs quick access to finance, will help support our growth ambitions in 2017 and beyond, enabling us to fulfil our purpose of helping people and businesses in the UK prosper.
"Looking ahead, we expect to see a changeable and more challenging macro environment in 2017. We believe the transformation we have made in putting the customer at the heart of our business, coupled with a continued focus on costs and risk management, gives us solid foundations to succeed and confidence in the future.”
