The Courier & Advertiser (Fife Edition)
Bank warns of challenges to market
High street lender Santander warned of a “changeable and potentially more challenging” economic outlook amid the fallout from the Brexit-hit pound as it revealed lower first-quarter UK profits.
The pound’s plunge since the Brexit vote left its Spanish owner Banco Santander nursing an 8% fall in UK profits at £354.5 million.
In the UK arm, reported profits were 1% lower at £525m for the first three months of 2017 as it took a further £32m charge to cover claims for payment protection insurance (PPI) compensation.
It added that net mortgage lending fell by £400m.
Chief executive Nathan Bostock said the group was bracing for a tougher 2017 as Brexit-fuelled inflation from the weak pound hits consumer spending power.
The group said it expects UK growth to remain “solid” this year, but added clouds are beginning to appear on the horizon.
“Higher inflation, largely from the lower value of sterling, could reduce households’ real earnings growth,” the bank warned.
“This, and a potentially more challenging macro environment going forward, adds a degree of caution to our outlook.”
Santander said its extra PPI charge is set to cover costs until the deadline for claims in August 2019, which will draw a line under the industry’s costly mis-selling scandal.
The wider Banco Santander group posted a better-than-expected 14% leap in first-quarter net profit to £1.59 billion as strong growth in Brazil offset the lower UK earnings.
Meanwhile, Metro Bank is inching closer to the one million customers mark as profits and deposits continue to rise at the challenger bank.
The lender, which launched in 2010, signed up 72,000 people in the first quarter to take its total to 987,000.
Chief executive Craig Donaldson has said reaching the one million mark would make it a “proper player” in the banking sector.
The bank saw a 13% increase in deposit growth to £9bn quarter on quarter, while underlying pre-tax profits rose from £1.5m to £2m.
Metro Bank said it is confident about delivering a full year of profitability in 2017, and achieving its 2020 guidance.