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Updated 10:18 26/10/20

Santander profits hit by Brexit pound slump

By Daryl Jackson, News Editor

25 Jan 2017

Santander has warned on "significant" economic uncertainty following the Brexit vote after the slump in the pound helped UK profits fall sharply.

The Spanish lender also said a tax hike had taken its toll as attributable profit fell 15% to €1.7bn (£1.4bn), while profits for the wider group rose 4% to €6.2bn (£5.3bn).

Santander has 14 million customers and more than 800 branches in the UK.

It said the UK profit fall was driven by the introduction of the 8% bank corporation tax surcharge as well as "the weakening of the pound against the euro following the outcome of the referendum".

The pound has fallen by more than 10% against the single currency since the poll.

Santander also said there was "significant uncertainty about UK economic outlook following the EU referendum and global issues".

The lender added that house price growth in the UK showed signs of slowing while inflation - which is being pushed higher thanks to the fall in the pound - would squeeze real terms income growth.

However, it said some of the risks were mitigated by Bank of England action and the wider strength of the banking sector.

Foreign-owned companies earning sterling revenues are adversely affected by the fall in the pound as it means they translate to lower sums in their home currencies.

Santander said that stripping out tax and currency effects, UK profits were higher, as customer numbers and lending grew.

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