Santander takes £538m hit to settle PPI claims
Chief executive Ana Botin said the charge hit the bank's financial results in the six months to June, but still hailed its "strong track record of profitability".
The British arm of the Spanish banking giant saw pre-tax profits dip 3 per cent to 1.2 billion in the period as higher regulatory costs dented earnings. Profits after tax and the PPI charge were 300m.
The hit comes after the High Court in London decided that new rules on the mis-selling of PPI could be applied retrospectively and the British Bankers' Association pulled an appeal against the decision. Santander UK is the latest bank to reveal its PPI charge after Lloyds Banking Group made a provision of 3.2bn, Royal Bank of Scotland set aside 850m, Barclays 1bn and HSBC earmarked $440m (270m).
Santander said its results had also been hit by Basel III requirements - European rules that require banks to hold more capital to protect themselves against future financial crises.
Gross mortgage lending was down 21 per cent in the first half from 12.3bn last year to 9.7bn.
But the group heralded its commitments to small business lending, made under the Project Merlin agreement with the UK government. Santander said it had exceeded its targets in the first half, delivering gross lending of 4bn, of which 2.1bn went to small and medium-sized enterprises.