As part of the banking giant’s Q2 trading statement covering the six months to 30 June 2024, it confirmed customer deposits fell from £193.6bn to £188bn.
This includes a decline from £65bn to £62.8bn in current accounts, and a reduction from £77.5bn to £73.2bn in savings accounts from 31 December 2023.
Santander said the £5.6bn difference in total H1 2024 customer deposits “followed savings outflows due to repricing actions taken in Q2 2024”.
This ties in with the banking giant slashing the interest rate on its popular Easy Access Saver Limited Edition (Issue 3) account.
In March this year, it informed customers that the rate would fall from 5.2% AER (variable) to 4.2% AER (variable) as of Monday 20 May.
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At the time of its launch in September 2023, it was a best buy, but once the rate was slashed, competitors easily beat its revised offering.
As of today, savers can still gain a market-leading rate of 5.2% from Ulster Bank. Its Loyalty Saver requires a minimum £5,000 and, as its name suggests, you do need to hold its current account to get the deal.
Loans, credit cards, mortgages and arrears
Customer loans lowered from £206.7bn six months ago to £201.7bn, including £2.6bn on credit cards.
Santander revealed that 57% of customers repay their credit card balance in full each month (up from 55% in 2023). However, “as expected”, it has seen an increase in arrears (over 90 days past due) in H1 2024, from 0.51% to 0.54%.
Turning to mortgages, the average new loan size stands at £234,000 (up from £228,000 in 2023) as it completed £7.4bn in gross mortgage lending in the first half of the year, a £4.4bn decline. It said that the level of arrears from recent internal transfers “remains low”, with less than 1% of customers entering arrears within 12 months.
By the end of June, 0.84% of its mortgage accounts were in more than three months of arrears, a slight increase from a share of 0.7% of accounts at the end of 2023.
Santander also noted that a fifth of its mortgage portfolio was due to mature in the next 12 months, and 77% of accounts reaching the end of their incentive period had stayed with the lender.
Overall, Santander reported profit before tax of £804m, down 31% from £1.17bn in H1 2023, while profit after tax came in at £597m, down 30% from the £858m reported this time last year.
Motor finance
In January 2024, the Financial Conduct Authority (FCA), the city regulator, initiated a review of historical commission arrangements between motor finance firms and dealers. Today, Santander confirmed it has not set aside money for potential car finance mis-selling claims.
Santander noted: “While it is possible that certain charges may be incurred in relation to the FCA’s review or related existing or future county court claims, Financial Ombudsman Service [FOS] complaints and the Competition Appeal Tribunal [CAT] proceedings, it is not considered that a legal or constructive obligation has been incurred in relation to these matters that would require a provision to be recognised at this stage.
“The resolution of such matters is not possible to predict with any certainty and there remain significant inherent uncertainties regarding the existence, scope and timing of any possible outflow, which make it impracticable to disclose the extent of any potential financial impact.”
Mike Regnier, CEO, said the first half financial results “were in line with expectations”.
Regnier said: “We remain focused on supporting our customers and delivering products and services that help them make the most of their money. We’re offering competitive savings rates and improved access to mortgage financing.
“We’ve seen an increase in customers choosing our products with more businesses using Banco Santander’s global network to trade abroad and continued success with our Edge current account. We will continue to leverage the scale and expertise of Banco Santander to ensure we’re offering customers innovative and sustainable products. Looking ahead, we remain well-positioned to support our retail and business customers as they benefit from the fall in inflation and improving economic picture.”
