Cheap UK mortgages weigh on Santander. Consumers would be advised to strike but, of course, Brexit

Santander kicked off the banking season with a whimper.

The Eurozone’s biggest reported a 5 per cent fall in first half profits, with the second quarter of the year proving particularly challenging. The UK, where earnings fell by 36 per cent, was a very notable weak spot.

Here’s what CEO Nathan Bostock had to say about its less than stellar contribution to the bottom line. Allergic to corporate twaddle? You’d best leave the room: “The results for the first half of the year reflect the start of a multi-year investment in our strategic transformation programme, a number of external factors and our prudent approach to risk.”

You know that when a corporate executive puts his name to something like that he’s sitting on a steaming pile of doggy doo.

It must be particularly painful for Bostock to be in that position. There were bright spots in the bank’s overall results, which come against a backdrop of low interest rates across Europe. They make it tough for banks to make money and there were also one off hits related to an acquisition a couple of years back.

However, the sprawling empire’s Latin American businesses helped cheer things up by delivering solid results and the shares enjoyed a modest rally after some difficult days.

So what’s going wrong in Blighty? In a word competition. The mortgage market is in the midst of a one of its periodic price wars which is hurting Santander’s bottom line.

In response, Bostock said the bank has “continued to invest in our business in order to strengthen our competitive position and improve efficiency which has resulted in additional strategic transformation costs”.

Yep. More doggy doo. What he means is Santander has been seeking to protect its position in the market and ride out the storm. He has also been closing branches and laying people off. That costs money, hence those “additional transformation costs”.

It will be interesting to see how this is reflected in the forthcoming numbers from other UK lenders. Britain’s banking market needs more of this sort of competition, not less. I always keep an eye on the net interest margin of retail banking bellwether Lloyds when it reports. This has been steadily rising despite those low interest rates.

In a properly competitive market that shouldn’t be happening.

If the price of lenders getting a bit more punchy is putting up with more Bostock style verbiage from his peers it’d be worth it.

Consumers would usually be best to strike while the iron’s hot, however, because these things don’t usually last. Unfortunately, you can easily understand why some may be reluctant. A dismal Conservative government is proving that, yes it is possible to plumb lower depths than anyone ever imagined over Brexit. Bozo Boris, with his no deal threats, is looming over everything.

Bostock mentioned that. Apparently the bank has been making preparations, which shows he’s not as daft as his words might make him look.