Santander H1 profit hit by PPI claims in UK

 

Spain's Banco Santander is to take a one-off charge of 620 million euros to provide for insurance mis-selling claims in Britain, hurting its first-half profit.

British banks including Lloyds and Barclays have unveiled billions of pounds of charges to cover compensation for mis-selling on payment protection insurance policies (PPI).

Santander said on Wednesday first-half net profit was 3.5 billion euros, down 21 percent, against a 4.15 billion euro polled forecast, after the charge.

Net interest income - what a bank earns on loans minus what it pays out on deposits - was in line with forecasts.

The euro zone's biggest bank, the majority of whose business is in retail banking, emerged as one of the most solvent banks in Europe in region-wide stress tests earlier this month.

However, some analysts are concerned about the weakening effect of recent acquisitions on the bank's capital ratios.

Without the one-off payment, results would have been down 7%, dragged lower by rising funding costs and higher provisions against bad assets in Spain in the wake of a property bust.

Bad loans as a percentage of total loans crept higher to hit 3.78% at end-June against 3.61% at end-March.