Carillion collapse contributed to 21% drop in Santander UK profits

The Spanish lender reported a strong performance elsewhere

The lender made up for UK losses elsewhere in the business (REUTERS)

Santander said the impact of Carillion’s collapse contributed to a 21 per cent drop in UK profits in the first three months of 2018.

UK pre-tax profit fell to £414m from £525m in the same period of 2017, while interest income dropped to £906m from £940m.

The Spanish-owned reported credit impairment losses of £60m in the first quarter, compared with a loss of £13m last year, driven in part by a drawdown by Carillion, which fell into liquidation in January.

Nathan Bostock, UK chief executive, said: "Our first quarter results have been impacted by ongoing competitive pressures in the UK. We have maintained our investment in business transformation and growth initiatives even though regulatory, risk and control costs stepped up, given a number of major projects are due to be implemented during 2018.

“Cost discipline remains an area of particular focus for management, with targeted actions expected to reduce the cost run rate over the year and deliver operational efficiencies.''

However, overall profits were up 10 per cent to €2.05bn (£1.8bn), thanks mainly to a strong performance in Santander’s largest market, Brazil. The bank makes more than a quarter of its profits in the South American country, and in the first quarter profits improved by 7 per cent.

Shares in Santander edged down in early trading.