TSB Bank has announced a dramatic surge in its earnings, revealing pre-tax profits jumped by more than a third during the first three quarters of 2025. This robust financial performance comes as the bank prepares for its high-profile acquisition by Spanish banking giant Santander.
Strong Financial Results Amid Economic Uncertainty
The bank reported a pre-tax profit of £270.6 million for the first nine months of the year, representing a substantial 38.2% increase compared to the £195.8 million it earned during the same period in 2024. This impressive growth was achieved despite a challenging economic backdrop, with the bank noting that UK consumers remain cautious due to rising inflation and weakening economic growth.
Driving this profitability was a significant reduction in operating expenses, which fell by 7.5% year-on-year. TSB attributed these savings to a concerted effort to reduce business costs and simplify its operations.
The Road to Santander Acquisition
The positive earnings report will be welcome news for TSB's future owner, Santander, which struck a deal with TSB's parent company, Sabadell, for a takeover. The transaction values TSB at £2.65 billion, with the final sale price estimated to rise to £2.9 billion once the deal completes early next year.
Santander has stated that acquiring TSB will bolster its profitability in the UK market. The plan involves integrating the TSB brand into the Santander group, a move that has raised concerns among staff about potential job cuts and branch closures across the combined network.
Lending Market and Consumer Behaviour
TSB, which ranks as the 11th largest bank for mortgages in the UK, described the lending environment this year as challenging. While total customer lending remained broadly flat, the bank saw a 9% rise in mortgage applications, indicating some resilience in the housing market.
The bank also reported that savings balances had edged higher, though this was partly offset by increased spending from current accounts and higher tax payments from its business customers. In a statement to investors, TSB noted, "UK consumers remain cautious yet resilient in an uncertain economic environment." It added that while inflation had increased slightly in 2025 and economic growth had weakened in the second half of the year, the housing market has remained stable and interest rates are showing a gradual reduction.
Beyond its financials, TSB highlighted its social initiatives, revealing that its emergency flee fund had helped more than 275 people escape abusive situations in the first nine months of 2025. The fund, launched three years ago, provides domestic abuse victims with up to £500 for essential costs, which does not need to be repaid.
