Abbey National has outshone its UK rivals this year, with strong deposit inflows countering the credit market freeze, along with high investment sales, well-covered loans and buoyant current account openings.

Spanish parent Santander, which now includes Alliance & Leicester and the Bradford & Bingley savings business, said yesterday that Abbey had increased sterling profits by 20% to £737m in the first nine months of the year.

"Net customer deposit inflows were up 70% year-on-year at £4.3bn, with both second and third-quarter flows more than double those in the same periods of 2007," Santander said.

At a time when rival HBOS found its funding model under extreme stress, "Abbey's short-term funding needs were reduced during the year, with growth in retail lending funded by the rise in customer deposits", according to the nine-monthly report by the parent bank.

"Growth in net mortgage lending was largely due to greater retention of customers and sustained gross lending volumes in a smaller market," Santander said. Abbey grabbed a 28% share of net mortgage lending, due to the withdrawal of some competitors, a share which is now likely to fall.

Its secured loan coverage was double the average of other UK banks, while coverage of unsecured loans remained over 100%. Unsecured personal loans fell by 18% and now represent only 2% of retail loans. Total customer loans were up 11% year-on-year to £121.9bn.

"As already announced, Santander does not plan to make use of the recapitalisation initiative with public funds," the bank said.

Abbey's gross operating income rose by 13.1%, against a 10.9% figure for the half-year, reflecting the robust growth in lending, a 9% uplift in funds, and efficient management of spreads.

"Net fee income increased 3.4% and gains on financial transactions 12% The efficiency ratio improved from 50.1% in September 2007 to 46% and is now well below the average for the UK sector."

Net loan to loss provisions increased by 26.5%, however, "to reinforce coverage in secured loans as market conditions worsen".

The sale of investment products rose 18%, despite the market being down 12%. "This underscored Abbey's capacity to provide guaranteed capital investment products at a time when customers are demanding low-risk, structured products," Santander said.

"Abbey continued to increase its level of bank account openings, up 29% and a record number in the third quarter," it added. "Abbey sees the current account relationship as a key driver of business and is strengthening measures in branches and remote channels to develop business in this area."

At the group level, Santander was posting a 5.5% rise in net profit in the nine months, weathering the financial crisis better than most banks, but a bad debt ratio up from 1.34% to 1.63% showed it was not unscathed.

Alfredo Saenz, chief executive officer, said the eurozone's biggest bank was sticking to its full-year guidance on profits, but added: "It is foreseeable that we will not grow in the future as we have been growing up to now."

Santander and HSBC have been seen as relative safe havens during the financial crisis, though concerns have grown recently about Santander's exposure to Latin America.

Saenz told analysts that Santander had a "more than sufficient capital base capital is not an issue for the bank".