The bank also reported £1.1bn of net mortgage lending, down 80% from £5.5bn in the previous year.
In the second half of 2011, Santander UK increased its gross mortgage lending 44% from £9.7bn to £14.0bn.
It claims that its gross mortgage lending of £23.7bn in 2011 equated to an estimated market share of 17.3%, down from its 17.7% share in 2010.
The average loan to value of new mortgages written was 65% in the 12 months to December.
Santander UK reported its trading after profit to be £1.5bn in 2011, down 6% on the previous year, which it said was due to regulation and liquidity costs.
Its statutory profit after tax was more than 40% below 2010, largely impacted by the £538m provision set aside for PPI claims.
Ana Botin, chief executive officer at Santander, said: “Santander UK has delivered a solid performance in 2011 despite challenging market conditions, maintaining the strong underlying track record of its business while strengthening the balance sheet.
“Overall profitability declined, albeit trading profit after tax excluding regulatory impacts increased by 9% compared to 2010.
“The result demonstrated the robust nature of our business, with strong growth in SME lending and maintaining our established market positions in mortgages and savings.”
Botin added that Santander’s results also benefited from a good credit performance, built around its prime UK mortgage book.
She said: “2012 is likely to be a tough year for the UK banking industry. Economic prospects have deteriorated markedly even in recent months, whilst increased regulatory burdens and funding costs will impact the results further.”
