Santander profits rise but warns over Brexit impact

Santander UK has reported a rise in profit, but again warned that earnings could take a hit as a result of Brexit.

The Spanish lender’s British branch said profit before tax jumped 9 per cent to £1.6bn over the nine months to September 30 compared with a year earlier, but cautioned that the long-term outlook might not be as buoyant.

Chief executive Nathan Bostock said: “Although we have not seen a material impact on our business in the short period since the EU referendum, we do expect a more challenging macroeconomic environment ahead.

Sign up to our Business newsletter

Sign up to our Business newsletter

“This increased caution has prompted us to revise our 2018 return on tangible equity, cost-to-income and NPL ratio targets, as disclosed at the 2016 Banco Santander strategy update in late September.”

Results also showed a pension hit following the Brexit vote, and comes as company schemes are hammered by falling bond yields.

Santander UK said the defined benefit pension scheme had fallen into a £258m deficit, compared with a surplus of £483m a year earlier.

The bank has also put aside an additional £30m to cover costs related to the mis-selling of payment protection insurance, bringing its total provisions over the past nine months to £397m.

The UK banking industry’s PPI bill is already colossal, at more than £30bn so far.