Santander UK has reported a 14% rise in annual pre-tax profits to £1.51 billion for 2025, despite setting aside an extra £183 million to cover costs from the motor finance mis-selling scandal. The provision adds to the £295 million already allocated in 2024, as the bank warned that the ultimate financial impact remains uncertain and could be materially higher or lower.
The Spanish-owned lender cautioned that significant uncertainties persist regarding the nature, extent and timing of redress payments under the Financial Conduct Authority's (FCA) proposed compensation scheme. The FCA is expected to publish the results of its consultation into the scheme in March, which could affect millions of car finance deals.
Santander also outlined plans for further cost-cutting in 2026, driven by simplification and automation, just days after announcing the closure of 44 branches, putting nearly 300 jobs at risk. The bank expects its pending £2.65 billion acquisition of TSB to complete in the first half of 2026, creating the UK's third-largest bank by personal current account balances.
In its full-year results, Santander revealed that bad debt charges nearly tripled to £193 million last year and are expected to rise further in 2026, trending back towards pre-pandemic levels. The lender predicted a modest rise in UK unemployment in 2026 as firms shrink workforces in response to tax hikes and rising wage costs, with economic growth slowing to 1% this year from an expected 1.4% in 2025.
Mahesh Aditya, currently group chief risk officer at Banco Santander, will become chief executive of the UK bank on March 1, replacing outgoing CEO Mike Regnier. The UK results came as parent Banco Santander reported a 7.4% rise in fourth-quarter net income and announced a $12.2 billion deal to buy US rival Webster Bank.
