Santander UK issues new Brexit warning despite 9% profit

Santander UK has reported a rise in profit, but again warned that earnings could take a hit as a result of Brexit.

The Spanish lender’s British branch said profit before tax jumped 9% to £1.6bn over the nine months to September 30 compared with a year earlier, but cautioned that the long-term outlook might not be as buoyant.

Chief executive Nathan Bostock said: “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.”

Results also showed a pension hit following the Brexit vote, and comes as company schemes are hammered by falling bond yields.

Santander UK said the defined benefit pension scheme had fallen into a £258m deficit, compared with a surplus of £483m a year earlier.

The bank has also put aside an additional £30m to cover costs related to the mis-selling of payment protection insurance, bringing its total provisions over the past nine months to £397m.

The UK banking industry’s PPI bill is already colossal, at more than £30bn so far.