Santander UK arm sees impairments triple after Carillion collapse but group profits rise over 2017

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Fears For Santander UK As It Suffers A Credit Rating Downgrade
The collapse of Carillion dented Santander UK's profits (Source: Getty)

Losses from the collapse of Carillion dented profits at Santander’s UK arm, as profits rose across its global operations.

Impairments at Santander UK tripled year-on-year to £203m, mainly reflecting loans to the outsourcer and construction firm. Carillion entered liquidation on 15 January after rescue talks with the government and lenders failed.

Nathan Bostock, Santander UK chief executive, said: “Profitability was impacted by the losses incurred on our exposure to Carillion, which offset otherwise strong growth. We are working closely to support customers who have suffered from their collapse.”

Read more: Carillion rescue "undermined" by Royal Bank of Scotland and Santander

Bostock added the results were otherwise “solid”, with the bank “continuing to demonstrate resilience” amid an “uncertain environment”.

UK profits were £1.8bn, although in euro terms the UK operation’s contribution to the Spain-headquartered group fell by three per cent.

Profits at the overall group rose by 6.7 per cent in 2017, although Santander’s measure of underlying profits, stripping out one-off costs, rose by 20 per cent.

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The group’s executive chair, Ana Botin, described 2017 as “another very strong year”, highlighting strong growth in Latin America as Mexico and Brazil impressed.

Botin added that the acquisition of Banco Popular in Spain had helped to “accelerate our strategy”.

However, the bank took a €752m (£660m) impairment of goodwill on its investment in the US consumer arm.

The group’s net interest income, the money it makes on lending, rose by 10 per cent in 2017 compared to 2016.

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