How did Santander UK Group perform in the first half of 2019?

[Lillian McKenna]

[Simon Mugo]

Santander UK Group Holdings (LON:BNC) today announced a 36% decline in profitability during the first half of 2019 as the lender blamed its losses on the “highly competitive” UK mortgage market.

The banking group, which is a subsidiary of Spanish lender Banco Santander, reported that its pre-tax profits for the six months up to June 2019 declined to £575m from the £903m recorded in a similar period last year.

The lender’s net interest margin fell 11 basis points to 1.69% largely because the bank was forced to offer low-interest mortgages in order to compete with other UK lenders, which saw its operating income shrink 8% to come in at £2.1bn.

The Spanish lender is in the middle of a restructuring plan set to cost at least £400m with a target completion date set for 2021. The plan has seen the bank close multiple ranches and invest heavily in its digital platform, while at the same time revamping its corporate business.

Nathan Bostock, the Group’s CEO said: "These are uncertain times, and our profitability has been impacted by a fall in income due to the highly competitive UK mortgage market.”