Tuesday 16 August 2016 12:41 pm

Santander UK braces itself for bumpy road post-Brexit vote, as it considers what to do in a world of lower for longer interest rates

The chief exec of the UK division of banking giant Santander has warned the UK economy slowed noticeably in the run up to June's Brexit vote, and it was unlikely to get rolling again any time soon.

In the company's half yearly report, Nathan Bostock wrote that the slowdown in the UK economy was expected to continue while "economic and political uncertainties prevail".

For Santander UK in particular, the statement noted the bank's net interest margin was likely to decline over the rest of 2016, while cost management remained vital.

However, Bostock's assessment was not all doom and gloom. He highlighted that some of the worst sides of any downturn could be avoid by decisive action from the UK's central bank, while the capital buffers currently in place throughout the banking sector put it in a strong position to weather any storms.

"Despite the uncertainties we face, we believe we have the resilience and capabilities to sustain profitability and deliver on our strategy," wrote Bostock.

For the first six months of 2016, Santander UK reported profit before tax of £1.1bn, up from £929m for the same period the year before, while total operating income rose to £2.4bn, up from £2.3bn. These figures were largely trailed in the group's half year results, announced towards the end of last month.

Meanwhile, Santander UK's tax on profits also increased by 57 per cent, driven up partly by the recently introduced banking corporation tax surcharge.

Earlier this month, the Bank of England unleashed a range of stimulus measures in a bid to sharpen up the UK economy, as well as cutting interest rates to 0.25 per cent.

Yesterday, Santander UK announced it would be slashing the interest rate on its popular 1,2,3 account by 1.5 per cent, citing the anticipation of lower for longer interest rates as one of its reasons for doing so.

The risk section of the report released today revealed the bank was assessing what it would need to do should interest rates turn negative.