SANTANDER said today it has captured more of the UK banking market after seeing a rise in new bank accounts and mortgage lending last year.

The lender, which has recently completed the rebranding of its Abbey and Bradford & Bingley branches, posted a 30% rise in annual trading pre-tax profits to £1.54 billion in the year to December 31.

Santander has launched a fee-free Zero current account for existing customers and said it had opened an extra 1.1 million new bank accounts last year, slightly above its target.

Its share of the gross mortgage market rose to more than 18% in 2009, from around 14% the previous year, as net home lending climbed to £7.6 billion.

Santander will continue to take on the existing retail banking establishment by increasing the number of accounts each customer holds.

It said it plans to launch more products like the Zero current account "to reward" its existing 25 million customers.

The account, which is only available to Santander mortgage customers, has no overdraft fees and pays interest of 6% for the first year on balances of up to £2,500, providing at least £1,000 is paid into the account each month.

Santander, which is in the process of absorbing the Alliance & Leicester business, said after the rebranding its customers now had access to about 1,000 branches - rising to 1,300 after A&L is added.

Growth in net deposits was said to be strong, with gains of £14.9 billion from retail, corporate and private banking customers, which it said showed the bank was seen as a "safe haven" for savers.

Santander said the relatively low level of mortgage arrears and possessions was because it did not participate in the sort of high risk lending that has seen some rival struggle with rising bad debts.

The proportion of its mortgages more than three months behind on payments rose slightly to 1.37% in the last quarter of 2009, but this was compared to an industry average figure of 2.4% in September.

It had 820 properties in possession last year, down from 969 in 2008.

Average loan-to-value (LTV) on mortgages last year was 52%, but the slight upturn in the housing market and a tightening of other affordability measures saw the LTV rate on new business rise to 64%.

The bank slashed unsecured personal loans by 36% to £1.5 billion as it continues to shift its focus to existing customers.

As part of the same policy credit card sales dropped 18.5% from 2008.

The A&L addition boosted Santander’s plans to grow its corporate banking offer as lending to small and medium-sized businesses grew 16% last year.

Santander UK chief executive Antonio Horta-Osorio said the full-year results demonstrated that the bank’s business model was "delivering superior results".

"Our ongoing focus on efficiency means we can continue to share the benefits of this cost advantage with our customers through competitive products, demonstrated by us having more ’best buy’ mentions than any other high street bank," he said.

"This has enabled Santander UK to write significant new business and continue to support the UK economy with increased lending to homeowners and businesses."

The bank is in the process of a cost-cutting scheme which will see a saving of £180 million by the end of 2011 through removing duplications in its back office operations. The move is set to see the loss of 1,900 jobs.