Belfast Telegraph

Tuesday 23 September 2014

Tough new rules trim Santander's UK returns

High street bank Santander has said a £100m hit from tougher regulations left UK profits down by 3% in the first quarter.

The Spanish-owned group reported pre-tax profits of £572m against £588m a year earlier, blaming new rules requiring it to hold more cash, as well as more expensive wholesale funding markets.

Santander, which has snapped up a raft of UK players such as Alliance -amp; Leicester and Abbey in recent years, said UK profits would have been 20% higher year-on-year if the extra regulatory costs were stripped out.

But its figures also reveal the impact of a challenging and more competitive banking sector, with negative net mortgage lending of £600m in the first three months of 2011 as borrower repayments offset new loans.

Santander's UK decline follows a 9% drop in profits at Barclays in a disappointing start to the first quarter earnings season.

The wider Spanish headquartered Santander group also saw a fall in profits, down 5% to $2.1bn (£1.9bn).

UK banks are facing a raft of new rules and charges in the wake of the financial crisis, including the bank tax introduced by Chancellor George Osborne.

Barclays said yesterday its charges under the bank levy would be more than £400m this year, although the group's first quarter profit blow was largely down to a fall in investment banking revenues.

At Santander, regulatory costs in the UK offset a 50% plunge in bad debt losses, at £118m compared with £237m a year earlier.

It said it was on track with its Merlin agreement with the Government to lend £4bn this year, with gross lending of more than £1bn in the first quarter and net new lending of £600m.

But in a sign of the difficulties facing small businesses, Santander said its interest margin on new loans to the sector remained at historic highs.

Santander plans to spin off its British business through a stock market flotation later this year.

New UK chief executive Ana Botin, whose predecessor Antonio Horta-Osorio quit to head up rival Lloyds Banking Group, plans to outline flotation plans in September, so a listing could still happen in the fourth quarter.

COMMENT RULES: Comments that are judged to be defamatory, abusive or in bad taste are not acceptable and contributors who consistently fall below certain criteria will be permanently blacklisted. The moderator will not enter into debate with individual contributors and the moderator’s decision is final. It is Belfast Telegraph policy to close comments on court cases, tribunals and active legal investigations. We may also close comments on articles which are being targeted for abuse. Problems with commenting? customercare@belfasttelegraph.co.uk

Comment

More

Company Profiles

More

Help & Advice

More

People on the move

More