Spanish-owned bank Santander saw its UK profits fall by 21 per cent to £414million in the first quarter of this year.
The bank said it faced higher costs, took a hit from the collapse of Carillion and was operating within a ‘competitive’ environment, which ‘placed pressure on revenues.’
Santander UK’s arm saw its credit impairment losses rise to £60million, compared with £13million at the same point a year ago.
Profits: Spanish-owned bank Santander saw its UK profits fall by 21 per cent to £414million in the first quarter of this year
With customers now demanding higher interest rates, the lender’s UK arm said it will not achieve its aim of having 4.7million customers this year. Its customer base currently stands at around 4million.
Interest rates on a number of Santander’s savings products have not increased since last November, when the Bank of England upped rates from 0.25 to 0.5 per cent.
Nathan Bostock, Santander’s UK chief executive, said: ‘Our first quarter results have been impacted by ongoing competitive pressures in the UK.
He added: ‘Cost discipline remains an area of particular focus for management, with targeted actions expected to reduce the cost run rate over the year and deliver operational efficiencies.’
To settle any remaining complaints from the payment protection insurance mis-selling scandal, the bank said it was setting aside £327million.
Santander said it expects the UK economy to continue growing this year ‘at a similar pace’ to last year.
Impairment losses: Santander UK’s arm saw its credit impairment losses rise to £60million
But it warned that the inflation outlook could be higher than expected, which would hit real wages again and see consumer spending reined in once more.
Across the UK, Santander said mortgage lending increased by £1.9billion to £156.8billion, with gross lending standing at £7.6billion in the first quarter. But savings deposits fell by £700million to £60.1billion.
In its broader first quarter results, Madrid-based Banco Santander said it saw strong growth in Brazil, Spain and Mexico, and performed better in the US.
The wider Banco Santander group posted a 10 per cent increase in net profits to £1.8 billion for the first quarter, which was higher than expected.
The bank said the number of its customers using its digital services across the globe increased by 24 per cent to 27.3million over the quarter.
At its annual general meeting on 23 March, Banco Santander announced its intention to increase the dividend paid from 2018 profits by 4.5 per cent to 23 cents per share and pay the 2019 dividend entirely in cash.
Banco Santander’s share price is down 0.98 per cent to 476.30p.