High street bank Santander said lending to small and medium sized firms in the East of England by 28pc in the year end to December.

The banks said it provided £148m of new lending to SMEs in the region.

Meanwhile across the business it said it had halted falling profits at its UK arm last year after its retail division bounced back with a 27pc surge in earnings.

The Spanish-owned group saw profits in the retail bank jump to £1.6bn in 2013 as government schemes to revive the housing market and bank lending sent wholesale funding costs lower and as costly ISA savings deals launched to lure in depositors came to an end.

Overall underlying pre-tax profits held largely firm at £1.14bn in 2013 against £1.15bn in 2012 in a sharp reversal of the 20pc plunge seen at the half-year stage.

Its Spanish parent Banco Santander also revealed a marked turnaround in fortunes, with full-year profits nearly doubling to 4.37bn euros (£3.6bn) from 2.29bn euros (£1.9bn) in 2012 thanks to sharply lower bad debts, although fourth quarter figures came in below market expectations.

The group said there were 'no current plans' to float its UK business, but added the long-awaited listing remained a 'medium-term objective'.

Javier Marin, chief executive of Banco Santander, said last autumn that a flotation would not happen in 2014, but planned to revisit the situation later this year, signalling a potential spin off in 2015.

Its UK arm delivered a vastly improved performance in the final six months of 2013, with underlying profits in the final quarter more than doubling year-on-year to £248 million.

The housing market revival boosted gross mortgage lending by 28pc to £18.4bn.

Net lending - new loans less repayments - continued to fall, down 5pc to £148.1m as part of its drive to pull out of higher risk areas and interest only lending.

It has been reducing its mortgage book in recent years as it focuses on other areas, such as current accounts and small business banking.

But UK chief executive Ana Botin said it planned to grow both business and retail lending in 2014, with the group expecting a rise in net mortgage lending for the first time in two years as it looks to maintain its share of the market at around 12.4pc.

She said: 'The UK economic recovery is strengthening, although uncertainties remain in the banking environment for the year ahead.'

'We will continue to support our customers and the broader economy: our intention is to grow both our commercial and retail lending in 2014,' she added.

Net lending to small businesses leapt 10pc higher to £11.7 billion last year, while it saw a 75pc surge in current account balances to £27.9bn thanks to ongoing take up of its 123 account.

The focus on current accounts and business lending came at the expense of its savings business, with customer deposits down 3%.

It has shifted away from attracting depositors after suffering a hit from expensive savings deals, which have recently ended.

The bank also revealed no further cash set aside for payment protection insurance (PPI) compensation, which it confirmed had continued to slow in 2013, down to an average of £11 million a month in the fourth quarter from £26 million a month in 2012.

Santander said there was also no further provisions on top of the £232 million put by in 2012 to cover claims including interest rate swap compensation.