Santander UK profits hit by £538m PPI provision
Santander UK's pre-tax profits fell in the first six months of the year as the Spanish lender took a £538m provision against its expected pay-outs to customers mis-sold payment protection insurance.
Pre-tax profits were down 3pc year-on-year at £1.15bn, with Santander blaming the large provision and higher funding and regulatory costs. The fall comes as speculation grows the Spanish bank's parent will be forced to delay the stock market listing of its British arm until next year.
Profits at the Spanish parent fell, with net profits down 21pc to €3.5bn (£3.1bn), largely due to a fall in profits from the bank's wider European business. Santander shares closed down 4pc at €7.29.
Ana Botín, chief executive of Santander UK, said the bank had delivered a "robust performance" and was making strides to improve its customer service, which has been consistently rated among the worst in the banking industry.
"Finance results are, however, being adversely impacted by costs of liquidity, term funding and low interest rates. In line with other UK banks, a further provision for payment protection insurance remediation has also been made," said Ms Botín.
The increase in regulatory costs was put down to requirements that have forced banks to maintain higher capital levels and liquidity as well as the cost of paying the UK bank levy.
