Santander net profit dropped 5.3% year-on-year in H1 2019 due to structuring costs in the UK and Spain.
Net profit for the global banking group dropped from €6,899m ($7,715m) in HI 2018 to €6,531 in H1 2019. The drop between Q1 and Q2 in 2019 was even more drastic, a plummet of 18% from €3,601m to €2,929m.
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The drops in profit were attributed to structuring costs in Spain, thanks to the acquisition of Banco Popular, and in the UK. The total of these costs was €626m. Spain overall lost Santander €262m. The UK saw profits fall 41%
In addition, €80m was also set aside for PPI provisions.
UK profit fell by 13% year-on-year from €665m to €582m due to mortgage margins.
Banco Santander Group Executive Chairman, Ana Botín, said: “The bank has delivered its strongest underlying quarterly performance in eight years, reflecting the progress we have made in our commercial and digital transformation.
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By GlobalData“All our businesses continue to deliver solid results, with particularly good growth in North America, which now represents 17% of Group profits (vs. 14% at 30 June 2018).
“During the quarter we have taken a further step forward in our digital transformation with the creation of the Santander Global Platform area, which aligns our reporting structure with our organisation and strategy. This helps ensure that the group’s talent and scale can be leveraged fully by our high-growth digital and payments businesses, helping us offer the best services to retail customers, merchants and SMEs, while also increasing transparency around our digital investments.
“We have a strong foundation on which we can continue to grow profitably, and I am confident we will achieve the targets outlined at our investor day, including reaching a RoTE of 13-15% in the medium term.”
Santander digital gains
Santander attracted one million new customers in Q2 2019. This takes it to 142 million customers worldwide. Loyal customers also increased by 10% year-on-year to hit 20.6 million.
Digital adoption also increased as 34.8 million Santander customers now use digital services. In addition, 240 customers, on average, access one of Santander’s mobile or digital platforms. This is an increase of 28% over the past 12 months.
Branches did not fare as well. In the UK, branches dropped from 780 to 659. Spain fell from 4,469 branches to 4,247. Across the entirety of Europe, it fell from 6,910 locations to 6,427.
The only country that recorded significant increases in branch numbers was Brazil, going from 3,490 to 3,643.
