Santander was unavailable for additional comment, but in the nine months to September, the lender said it did gross mortgage lending of £11.5bn, down from the £16.8bn it lent in the same timeframe in 2011.

The lender said its tightened criteria on higher loan-to-value and interest-only mortgages resulted in lower gross lending.

The lender also revealed that its abortive £1.7m bid to buy 316 branches from the Royal Bank of Scotland cost it £52m.

Chief executive Ana Botin said:

“Our decision not to extend again the long-stop date for our planned acquisition from RBS was due to the ongoing delays and our concern that the continued uncertainty regarding timing was not in the best interests of our customers or staff. Our overriding obligation is to our existing and prospective customers and we acted in their best interests.”

Botin added that, despite the RBS setback, Santander remains on track to become not just a major retail bank in the UK but also a significant lender to small businesses.

So far, £1bn of funding has been accessed by Santander under the government’s Funding for Lending Scheme (FLS), which it said would be used to maintain its lending commitments to UK businesses.

The lender added that it will continue to focus on improving customer experience. It said it was the only bank to see a fall in Financial Ombudsman Service (FOS) complaints, down 32% in the first half of 2012, compared to H2 2011.