Santander UK’s provisions surge after branch closure backlash
Santander UK was struck with a surge in provisions in its first-quarter report as backlash mounted to its branch closure operation.
The lender’s provisions for liabilities and charges rose 69 per cent to £140m.
The firm said £42m of this was driven by “charges relating to changes to our branch network”.
This comes as the bank is set to close 95 branches in June 2025 and launch a new community bankers scheme to provide areas with face-to-face support.
The bank said credit impairment charges hit £33m and trended towards “pre-pandemic levels after a period of write-backs”.
This came as the bank’s non-interest income slumped 19 per cent to £77m.
The bank squeezed a 6 per cent increase to £1.1bn in its net interest income, amidst a waning backdrop.
The Bank of England has whittled rates down from a post-financial crisis high of 5.25 per cent last July to 4.5 per cent, leading lenders to brace for a hit to interest income.
Santander UK’s net interest income edged up
Operating expenses were down one per cent, with the bank citing cost savings and simplification and automation of its business, as well as lower head count.
But, pre-tax profit fell 8 per cent to £358m compared to the first quarter of 2024 where profit hit £391m.
Santander became the first lender to reduce mortgage affordability rates last month, enabling customers to borrow more.
The firm posted higher year-on-year gross mortgage lending of £5.8bn, compared to £3.1bn in 2024.
The lender spun of its litigation-hit motor finance arm earlier this month. Santander has reserved £295m in provisions for the car mis-selling scandal, which the Supreme Court is expected to rule on in the early summer.
This comes amidst wider speculation the Spanish firm is set to scale back UK business in a major overhaul to its business operations.
Mike Regnier, Santander UK’s chief executive, said: “The progress we are making drove improved business performance in the first quarter, with an increase in net interest income and a reduction in operating expenses.
“However, charges relating to changes to our branch network resulted in a lower profit before tax of £358m for the quarter.”
He added: “Looking ahead, we will look to build on our positive momentum and will continue to work closely with Banco Santander to ensure that we harness the benefits of being part of a global business.”