Buoyant Abbey bucks the trend of despair

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António Horta-Osório, chief executive of the former building society which in the final quarter of last year swallowed up its former rivals Alliance & Leicester and Bradford & Bingley, said: "2008 has been an excellent year for Abbey." But he cautioned that the coming year will be tough.

Even ignoring the effects of the takeovers, Abbey said statutory profits grew by more than 20% to £991 million last year as savers fled to safe havens and it took advantage of other UK banks' reluctance to lend to boost its presence in the mortgage and small business loans markets.

Abbey, bought by Spain's Santander Bank for £8 billion five years ago, said it captured almost 30% of the new mortgage market in the UK last year, almost treble its level in 2007. Longer term, its share of the gross mortgage lending market rose from 9.8% to 12.4% - well up with its signalled plans.

The Spanish have long said they wanted to capture a 10%-plus share of the UK's mortgages, savings bank accounts and branches. With the £1.3 billion takeover of A&L and the £400 million B&B deal, when the Government took the "bad bank" and sold the "good bank", it has comfortably achieved its initial ambitions. But Horta-Osório injected a heavy degree of caution, saying "2009 will undoubtedly be a challenging year" and confirming that the combined three banks will axe 1900 staff in the coming year.

Abbey also saw a sharp rise in repossessions and mortgage borrowers who are now three months behind with payments jumped from 7814 to 10,897.

Parent bank Santander also saw a sharp rise in provisions against bad loans across its business in Spain and Latin America as well as the UK. These were up by more than 60% last year to €14.2 billion (£12.6 billion).

The bank was forced to issue its profit figure last week after it said it would compensate private investors it had put into fraudster Bernie Madoff's funds. Net profits rose 9% to €8.9 billion.

Santander said that following the takeovers this country now makes up one-third of its total customer loans.