Santander profits tumble in 'competitive and uncertain' market

Santander has reported a half-year profit drop of 18 per cent, with underlying pre-tax profits down to £920 million for the six months to June 30

HIGH street banking giant Santander has reported half-year profits diving 18 per cent amid a "competitive and uncertain" market and said it will focus heavily on cutting costs.

The Spanish-owned group reported UK underlying pre-tax profits of £920 million for the six months to June 30, down from £1.12 billion a year earlier.

On a statutory basis, pre-tax profits fell 15 per cent to £903 million.

The bank said net interest income dropped 6 per cent after being hit by lower mortgage pricing and loss of customers on standard variable rate deals.

It saw net mortgage lending - gross lending less redemptions - growth of £2.3 billion in the first half.

But customer deposits fell to £172.6 billion from £174.4 billion a year earlier.

Nathan Bostock, chief executive of Santander UK, said: "The competitive and uncertain operating environment has resulted in profit before tax of £903 million, down 15 per cent yea on year."

He added: "Cost discipline is a key priority for management.

"We are progressing with our 2018 efficiency initiatives and expect the benefits of our actions to come through in the second half of the year."

The lender said earlier this year it continues to review its 779-strong branch network, having already announced 21 branch closures in the UK over the first half.

Santander took no further hit from payment protection insurance (PPI) mis-selling in the half-year, but it was knocked in the first quarter by a £60 million impairment charge, including a further writedown on Carillion as well as another firm, understood to be troubled fellow outsourcer Interserve.

The group's UK arm enjoyed a better performance in the second quarter, with profits up 18 per cent quarter on quarter at £489 million, with the absence of the Carillion impairment charges and lower costs.

It said it was also seeing signs that its net interest margin was "stabilising".

The wider Santander group posted a 4 per cent rise in interim profits to €3.75 billion (£3.3 billion) thanks to strong growth in the US and Brazil.

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