 reported a 8.1 percent decline in first-quarter profit for its UK business, as a result of the falling value of the pound currency.){kind=link}
Santander (NYSE:SAN) reported a 8.1 percent decline in first-quarter profit for its UK business, as a result of the falling value of the pound currency.
Santander said UK profits would have risen by 3 percent without the adverse impact of currency market fluctuations. The pound sterling currency has been particularly turbulent of late, as it continues to react to the UK’s decision to leave the European Union back in June and the subsequent economic uncertainty.
As a consequence, Santander UK boss Nathan Bostock continued to remain cautious about future economic outlook, warning of a “changeable and potentially more challenging” economic environment ahead. The bank attributed the weak performance of its UK business to mounting pressure on households hit by higher inflationary levels.
Alongside currency fluctuations, a £32 million penalty relating to payment protection insurance compensation claims also dampened profit margins for Santander UK across the quarter.
Nevertheless, the UK arm of the business maintained that it intended to “continue to focus on customer service in what remains a highly competitive market”. With regards to future economic outlook, the bank continued to emphasize the necessity for a “degree of caution”.
Santander Group as a whole performed positively with total profits for the Spanish-owned group up 14 percent, beating market expectations.
The bank reported net profit of €1.87 billion (£1.59 billion) for the first three months of the year, led by a growth in its Brazilian businesses, with Brazil continuing to exhibit encouraging signs of economic recovery.
Profit in Latin America jumped almost 50 percent during the first quarter, compared to a more moderate 10 percent rise in Europe, and fall of 8 percent across its UK business.
In terms of market value, Santander remains the largest bank within the Eurozone.
Santander shares are currently up 2.16 percent as of 11.44AM (GMT).
Lloyds Bank (LON:LLOY), RBS (LON:RBS) and Barclays (LON:BARC) are all set to report in upcoming days, which will provide a further indicator as to the state of UK banks.