Santander profit plummets as PPI claims takes £169m bite
The UK business of Santander took a major hit from the PPI mis-selling scandal as profits dipped in the first nine months of the year.
Pre-tax profits at Santander UK fell 43% to £785 million, as the bank took a £169 million charge from PPI.
Meanwhile, economic uncertainty as Brexit and a trade war continue to weigh on the global economy also hit its bottom line.
“Our profitability for the first nine months of 2019 has been impacted by ongoing competitive income pressure, additional PPI costs as well as transformation programme investment,” said chief executive Nathan Bostock.
A £127 million transformation charge helped the bank to reorganise its branch network, which is starting to result in improved efficiency. The impact will become clear in 2020, Santander said.
The Spanish bank is not the only one to face a major challenge from PPI mis-selling.
Last week, Barclays said it had taken a £1.4 billion hit from the scandal, as the deadline passed at the end of August.
The bank posted a £292 million net loss, down from a £1 billion net profit in the same period last year.
Santander saw its best mortgage growth since the years immediately after the financial crash, with net mortgages up £3.6 billion, while deposits grew by £4.2 billion.
Meanwhile, the bank said it had built up enough liquid assets to weather Brexit uncertainty.
However its outlook for the year, which is largely unchanged, relies on Britain leaving in an “orderly” way.
“The uncertain economic environment looks set to continue for some time, reinforcing our longstanding prudent approach to risk. We are delivering excellent customer experience while taking decisive steps to improve our efficiency and competitiveness,” Mr Bostock said.
“We delivered our strongest quarterly net mortgage growth in almost 10 years, driven by a focus on customer service and retention.
“We have also increased customer deposits across the business, with further improvement in customer loyalty.”