Santander profits drop 10% on restructuring costs, Argentina inflation

Banco Santander posted a 10.4% drop in first-quarter net profit on Tuesday as it took a hit from restructuring costs in the UK and Poland and high inflation in Argentina.

In the three months to the end of March 2019, net profit declined to €1.8bn from €2.05bn in the first quarter of 2018.

In the UK, pre-tax profit slumped 35% to £270m as it felt the impact of a highly competitive mortgage market, a demanding regulatory change agenda and the uncertain economic environment in the UK.

UK chief executive officer Nathan Bostock said: "In this context, we have accelerated our multi–year strategic transformation programme, with a focus on simplifying, digitising and automating the bank for our customers, to deliver on our strategic priorities and significantly improve operational efficiency over time.

"We continue to focus on the service we provide to our customers, with growth in mortgages, consumer finance and lending to trading business customers, while maintaining our conservative approach to risk. The steps we began to take last year to actively manage costs are continuing to have a positive impact on our cost base."

Restructuring costs in the UK came to €66m, while in Poland they came to €12m.

Overall costs were up 2% during the quarter as a result of investments in transformation and digitalisation, the improvements made to the distribution networks, the slight perimeter impact from the integration of the retail and SME businesses acquired from Deutsche Bank Polska and the effect of high inflation in Argentina.