Santander profits take a £450m hit over PPI

High street banking giant Santander has revealed profits last year took a £450 million hit for payment protection insurance as the scandal continues to take its toll on the sector.
ATM. Photo credit: Gareth Fuller/PA.ATM. Photo credit: Gareth Fuller/PA.
ATM. Photo credit: Gareth Fuller/PA.

The Spanish-owned lender said UK profits fell 4.1 per cent to £1.3bn after the charge to cover compensation for PPI mis-selling.

It comes as rival Royal Bank of Scotland set aside another £500m for PPI as part of a raft of financial provisions that will knock its bottom line by £2.5bn, pushing it into a loss for 2015.

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Santander said that without the PPI charge, underlying profits for last year would have been 20 per cent higher at £1.8bn.

It is the first of the UK banks to post figures for 2015 and, together with the shock RBS update, sets the scene for yet another year in which the industry counts the cost of past mistakes.

Santander’s Spanish parent, Banco Santander, said the overall group’s fourth quarter underlying pre-tax profits tumbled 22 per cent quarter on quarter to £1.65bn, largely after the UK arm’s PPI provision.

For the whole of 2015, Banco Santander’s underlying pre-tax profits rose 12.5 per cent to £8.3bn.