SANTANDER REVEALS FLAT PROFITS AND WARNS OVER RISING INFLATION AND MORE CHALLENGING ENVIRONMENT
High street lender Santander has posted flat first half UK profits, but warned over rising inflation and a more challenging economic environment.
The bank reported pre-tax profits of £1 billion in the six months to June 30, in line with the same period last year.
Adjusted profit rose 13% to £1.1 billion and net interest income, a key metric, grew 8% to £1.9 billion.
But the firm said that it sees “greater uncertainty” and downside risks in its outlook for the end of this year and the beginning of 2018.
“The labour market remains strong, but higher inflation, largely from the lower value of sterling, is now reducing households’ real earnings.
“This is likely to result in lower consumer spending growth which, when combined with a potentially more challenging macro environment, adds a degree of caution to our outlook,” the lender said.
It took a £69 million charge to cover claims for payment protection insurance (PPI) compensation in the first six months of the year, much lower than rivals Lloyds and Barclays, which also reported figures this week.
Santander added that net mortgage lending fell by £200 million after withdrawing some of its most competitive rates at the end of last year.
Chief executive Nathan Bostock said: “Santander continues to make strong progress against the backdrop of a changeable operating environment.
“We performed well in the first half of 2017 – with net interest income growth, ongoing cost discipline and good credit quality.
“Our relentless focus on enhancing customer service and developing innovative solutions for our customers, coupled with our focus on cost efficiency and a prudent approach to lending should ensure we remain resilient in a more uncertain operating environment.”
The wider Banco Santander group posted a better-than-expected 37% leap in second quarter net profit to 1.75 billion euro (£1.5 billion) as strong growth in Latin America boosted earnings.