High street banking giant Santander has revealed a 35% plunge in first-quarter profits after being knocked by Brexit uncertainty and competition in the mortgage market.
The Spanish-owned lender reported pre-tax profits of £270 million for the first three months of 2019, down from £414 million a year earlier.
Underlying pre-tax profits fell 13% to £352 million in the first quarter.
The group said results suffered as the wider economy has been held back by Brexit fears, as well as mortgage margin pressure, costs of its swingeing overhaul, and charges related to ring-fencing to keep personal and small business banking services separate.
The figures come after Santander announced earlier this year that it is to axe 140 branches across the UK, putting more than 1,200 jobs at risk.
First-quarter figures showed it booked £77 million in charges related to the overhaul.
Nathan Bostock, chief executive of Santander UK, said: “Our first-quarter results reflect the impact of the highly competitive mortgage market, a demanding regulatory change agenda and the uncertain economic environment in the UK.
“In this context, we have accelerated our multi–year strategic transformation programme, with a focus on simplifying, digitising and automating the bank for our customers, to deliver on our strategic priorities and significantly improve operational efficiency over time.”
Santander said it is now assuming there will be no interest rates rises at all in 2019 and forecasts a “slight deterioration” in economic growth due to Brexit and a slowing global economy.
Its figures showed net interest income – a key measure for retail banks – dropped 6% in the first quarter largely as a result of the mortgage woes.
Net mortgage lending edged £200 million higher, with Santander saying it was focusing on retaining existing customers in the competitive market conditions.
Its Spanish owner, Banco Santander, was also weighed down by the British performance, with net profits falling 10% to 1.84 billion euros (£1.6 billion) for the three months to March.