Santander's UK business took a major hit from the PPI mis-selling scandal in the three months to September, as profit before tax fell 43% on the same period last year, while it also battled stiff competition.
The Spanish bank made a pre-tax profit of £785million, as it took a £169million charge from PPI, and invested £127million in a programme to transform the business by restructuring its branches.
But in better news, the lender said it had cemented its position as the third largest mortgage lender in the UK, adding £3.6million in net new mortgages, while customer deposits grew £4.2billion.
Santander UK chief executive Nathan Bostock said: "The uncertain economic environment looks set to continue for some time, reinforcing our longstanding prudent approach to risk.
"We are delivering excellent customer experience while taking decisive steps to improve our efficiency and competitiveness.
"Our profitability for the first nine months of 2019 has been impacted by ongoing competitive income pressure, additional PPI costs as well as transformation programme investment.
"Despite this, we delivered our strongest quarterly net mortgage growth in almost 10 years, driven by a focus on customer service and retention.
"We have also increased customer deposits across the business, with further improvement in customer loyalty."
