Santander UK profits slump 14 per cent in “uncertain” environment for banks

Santander UK profits slumped 14 per cent last year as the bank struggled with cost pressures and an “uncertain operating environment.”

The UK arm of the Spanish-owned bank cited competitive incomes pressures and higher regulatory costs for the year-on-year downturn.

Profits fell by £247m to £1.57bn in 2018 and the bank’s “loyal retail customers” stood at 4.1m at the end of the year, below its target of 4.7m.

While net mortgage growth of £3.3bn was the strongest lending in three years amid an increasingly competitive market, new mortgage margins were lower.

UK chief executive Nathan Bostock said the bank’s outlook for 2019 was “cautious” given the highly competitive banking market, heightened regulation, trade restrictions and geopolitical tensions.

When it came to Brexit, chief financial officer Antonio Roman said the bank had positioned itself to deal with a number of outcomes.

He said it helped that the bank’s UK wing was a subsidiary of Spanish-based Banco Santander.

“Our Brexit preparations are comprehensive and we have dedicated significant focus to ensure we can continue to serve our customers whatever the outcome,” the bank said in a statement.

“In particular we have taken account of the nationality and location of our people and customers, contract continuity, financial markets infrastructure such as clearing, access to euro payment systems as well as third party services and flows of data into and out of the European Economic Area, it added.

Globally, Santander reported a four per cent net profit rise in the fourth quarter led by a strong performance in Brazil and Mexico.

Annual net profit jumped 18 per cent, the bank said.

Earlier this month the bank announced plans to close 140 branches across the UK as a result of a shift in customer behaviour.