Santander's UK profits has been reversed

Santander has said that the introduction of the 8% bank corporation tax surcharge this year pushed its profits into reverse in the third quarter.

The bank reported that the tax turned a 0.3% increase in pre-tax profits into an 11% decline to €1.2 billion (£1.07 billion) in the three months to the end of September.

Groupwide, Santander reported attributable profits of €1.7 billion in Q3, up 1% year-on-year, although nine month profits of €4.6 billion were down 22.5% on the same period in 2015.

Net interest income rose 2% year-on-year, with growth in seven of the 10 markets it operates in, primarily driven by higher volumes in both lending and deposits in Latin America, Portugal and Poland.

The bank said that it made an additional provision of £30 million for payment protection insurance claims in the quarter taking the total up to £397 million for the year. It also has £82 million already earmarked to cover other claims, 'relating predominantly to wealth and investment products'.

Santander UK chief executive Nathan Bostock again cautioned on the impact of the EU referendum vote, saying: 'Although we have not seen a material impact on our business in the short period since the EU referendum, we do expect a more challenging macroeconomic environment ahead.

'This increased caution has prompted us to revise our 2018 return on tangible equity, cost-to-income and NPL ratio targets, as disclosed at the 2016 Banco Santander strategy update in late September, and which are re-affirmed today.

'By building upon the strong foundations we already have in place, Santander UK is well positioned to succeed despite macroeconomic headwinds. Our business is adaptable, innovative and efficient, giving me confidence in our ability to continue to give outstanding value to our customers.

'Furthermore, our good business performance, strong balance sheet and position as the only scale challenger in the UK provide us with opportunities to further build our product set and relationships with existing and new customers in the period ahead.'

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