Santander UK sees half-year profits slump by almost a third but hopes for second half ‘tailwinds’
Santander UK has seen half-year profits slump by almost a third after being knocked by shrinking mortgage lending and higher savings rates, but is hoping for a boost from “tailwinds” over the final six months.
The Spanish-owned high street lender reported a 31 per cent drop in pre-tax profits to £804m in the first half of 2024.
Mortgage loans slumped by £4.4bn over the half year, while its net interest income – the difference between the interest it generates from loans and pays out to savers – fell 11 per cent.
This came after it forked out more to savers in the first three months of the year following interest rate increases.
But the group said it had since taken “pricing” action to make savings rates less attractive, which has seen customer deposits fall by £5.6bn.
This also helped profits increase by 6 per cent quarter-on-quarter to £413m in the three months to June 30, although the out-turn was 52 per cent lower than a year earlier.
Mike Regnier, chief executive of Santander, said: “Our first half financial results were in line with our expectations, with a more positive trajectory reflecting improvements in the second quarter.”
He added the group is expecting “the impact of our pricing actions” to help provide “net interest margin tailwinds” over the second half.
Lenders have seen profits fall back in 2024 from bumper returns seen in the past two years as competition in the mortgage and savings market has heated up.
Santander is the first bank out of the stalls this week with its half-year results.