Santander UK profit slides after motor finance reserves balloon
Santander UK’s profit took a knock in the first quarter of the year after the bank made another hefty top up to its motor finance provisions.
The UK arm of the Spanish banking giant booked a £202m pre-tax profit for the first three months of 2026. This was down 44 per cent from the same period last year, namely due to the additional £179m provision for the car mis-selling scandal.
The top up takes the overall reserve to £640m.
The bank’s former UK chief Mike Regnier, who was replaced by Mahesh Aditya at the beginning of the year, had previously lashed out at the City watchdog over the redress saga and called for government intervention.
The Financial Conduct Authority (FCA) revealed the final rules for its scheme at the end of March, which cut banks total bill to £9.1bn from £11bn previously.
Santander has ruled out legally challenging the scheme.
Santander cost-cutting regime continues
Elsewhere, the firm’s net interest margin – a key metric for profitability from lending – contracted eight basis points from the first quarter of 2025 to 2.22 per cent. The bank pointed to the higher cost of deposits, which also led to net interest income decreasing two per cent to £1.1bn.
Operating costs improved seven per cent to £638m as the bank continued with its plan for simplification and automation.
The lender said in January it would close another 44 branches, which will put 291 jobs at risk of redundancy, as the bank turns its focus to its digital offer to keep at pace with its fintech competitors.
Aditya said the bank’s landmark acquisition of TSB is expected to complete “imminently”.
“The acquisition represents the single largest inward investment in the UK banking sector for over 15 years and underlines Banco Santander’s commitment to the UK,” Aditya said.
Santander beat out its peers to snap up TSB for £2.6bn last July.
TSB will add 5m customers, £34bn in mortgages and £35bn in deposits to Santander’s portfolio, as well as its 218 branches.