Santander UK bank profits hit by uncertainty

Profits at the UK arm of Santander fell last year after what the High Street bank described as an "uncertain operating environment".

While it said its mortgage lending was its strongest for three years in the highly competitive market, profit margins were squeezed.

Profits for 2018 were £1.6bn, down 14% year-on-year.

The bank also revealed that it was setting aside £58m for issues in its consumer credit operation.

This is likely to be a reference to its credit card business. However, Santander did not disclosed further details.

It also confirmed that the figures include the cost of last month's £32.8m fine from the Financial Conduct Authority for "serious failings" in dealing with the accounts of deceased customers.

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Nathan Bostock, the chief executive of the UK business, said: "Our 2018 financial performance reflects our strategy of selective growth, while actively managing costs in the competitive and uncertain operating environment".

Earlier this month, the bank said it would close 140 branches because customers were not using them as much.

The UK bank, which is part of Spanish giant Santander, said its preparations for Brexit were "comprehensive".

"While uncertainty around Brexit remains we are preparing for a number of outcomes in order to minimise the impact on our customers and our business," the bank said in a statement.

Full-year profits of the entire bank were up 18% at €7.8bn (£6.8bn).

Santander's operations in Brazil were the biggest contributor, generating around a quarter for the profits.

"Latin America remains an important engine of growth for the group, with good progress, especially in Brazil and Mexico," said the bank's chairwoman Ana Botin.

Last year, the bank recruited the head of investment banking at UBS, Andrea Orcell, to be its next chief executive.

However, this decision has been reversed after the bank said it could not meet his expectations on pay, reportedly worth €50m. The Financial Times has reported that he is preparing legal action.