Challenges for households expected to continue well into 2023, says Santander

The bank also said it would continue to control operating expenses and expected to announce further savings from its transformation programme as it published its third quarter results.

Over the quarter, Santander’s profit from continuing operations before tax rose by 4% to £1,489m. The bank said the higher profits were supported by increased income and lower costs.

In a statement, Santander said: “The outlook remains uncertain, with higher inflation leading to an increased cost of living and a drop in real disposable income this year.

"Mortgage interest rates have risen with the expectation of further increases to base rate and are likely to remain substantially higher than a year ago. These challenges for households and businesses are expected to continue well into 2023 and could impact credit impairments.”

Mike Regnier, the chief executive, commented: “Many of our customers remain worried about the impact of the cost of living, and they are looking to us to help them navigate this challenging environment.

"As one of the UK’s leading mortgage providers, we particularly understand the concerns of existing mortgage customers, first time buyers and especially those whose fixed rate mortgage is about to come to an end.

"We are providing advice and guidance on how households can manage their mortgage, such as exploring options around length of term.

“We are also continuing our programme of proactively contacting customers who are struggling, to offer help with managing their finances and energy costs.

“In this environment, we have maintained a focus on how we can deliver more for our customers with products that deliver real value,’’ he said.

"We introduced initiatives like double cashback on gas and electricity bills, raised the 1|2|3 Current Account interest rate and offered some of the best savings’ rates amongst High Street lenders.

“We have also unveiled a package of measures to support our people at Santander, including a new helpline for colleagues that focuses on financial wellbeing.

"This follows August’s pay increase for 11,000 of our employees to help with the increased cost of living.

“These are a set of results reflecting the hard work of our people, but they also demonstrate the continued importance of taking a prudent approach to risk and maintaining a resilient balance sheet.

He added: “While we have seen no material deterioration in our mortgage book to date, we have increased our provisions.

“Looking ahead it is clear that the ongoing inflationary pressures, increased energy prices and impact on economic activity will mean the service and support we provide our customers and businesses will continue to be critical.”