The Courier & Advertiser (Fife Edition)
Lender Santander’s UK profits under pressure
High-street banking giant Santander has seen UK profits tumble 15% as the group cautioned over stiff competition and Brexit uncertainty.
The lender reported UK underlying pre-tax profits of £1.39 billion for the first nine months of 2018, down from £1.64bn a year earlier.
On a statutory basis, pre-tax profits fell 13% to £1.37bn for the nine months, while they were down 8% year on year in the third quarter to £467 million.
Parent Banco Santander said the UK performance came amid a “highly competitive environment with some remaining uncertainties over Brexit”.
The UK arm has continued to see profit margins on mortgages come under pressure and its costs rise.
It also revealed the group is “co-operating” with a Financial Conduct Authority (FCA) investigation over deceased customer accounts.
The group’s quarterly results showed profits were hit by a 6% drop in net interest income after making less money on its mortgage book, which was only partially offset by stronger gross lending and cuts to savings rates. Net mortgage lending – gross loans less repayments – rose by £2.3bn over the nine months, with gross mortgage lending of £21.3bn against £18.3bn a year earlier.
Santander has suffered after being hit by lower mortgage pricing and the loss of customers on standard variable rates.
Its customer savings balance fell £3.4bn as it trimmed its deposit rates.
But the group saw an improvement in charges with no further outlays for PPI or in relation to failed outsourcer Carillion or troubled group Interserve, which had affected previous results.
Santander UK CEO Nathan Bostock said: “Our results reflect competitive income pressures and higher regulatory project costs, as well as the impact of ring-fence transfers.”