Banking giant Santander in bullish mood despite PPI profit blow

Nathan Bostock is the chief executive of Santander UK. Picture: Contributed

Santander has seen profits at its UK operations tumble 37 per cent after taking a hit on the payment protection insurance (PPI) scandal and costs of its branch shake-up.

The Spanish-owned lender saw 2019 statutory pre-tax profits drop to £981 million following £169m in PPI charges after a rush in claims ahead of the late August deadline.

The group also booked £155m in costs for restructuring its branch network, which saw it shut 140 sites across the UK and cut some 1,200 jobs.

However, Santander said efforts to become more competitive in mortgages helped it notch up its highest growth in home loans for a decade.

UK chief executive Nathan Bostock said that while the recent general election result had provided some political certainty, Brexit worries would continue to hold back economic growth.

“Our 2019 results were impacted by the ongoing competitive income pressure on mortgages and PPI charges, but they also include the investment we are making as part of our plan to transform the bank for the future,” he told investors.

“We have continued to support our customers and I am pleased that we delivered our strongest net mortgage growth in a decade, reinforcing our position as the UK’s third-largest mortgage lender.

“We also successfully grew customer deposits across the business, driven by our focus on delivering great products and service, including an enhanced digital offering.”

Bostock added: “The environment for the banking sector remains challenging, with ongoing competitive pressures and a demanding regulatory agenda. However, the increased political certainty will be welcomed across the business community.

“We have taken decisive steps in 2019 to progress our strategic priorities and our focus on cost efficiency is starting to deliver tangible benefits.”

The group said it had helped 37,000 first-time buyers to buy a home, adding that it expected its net mortgage lending in 2020 to be in line with market growth.

Customer deposits increased by £5.7 billion, marking the bank’s strongest growth in three years.

Bostock added: “We are confident in our ability to succeed by providing our customers with an experience that is second to none and through a relentless focus on improving our efficiency and competitiveness.”