Santander UK's pre-tax profit for the first quarter of 2026 significantly decreased by 44% to £202 million, down from £358 million in Q1 2025. This substantial drop was mainly attributed to an additional £179 million provision set aside for historical motor finance commission payments. This charge contributes to an expected total bill of £633 million for the motor finance mis-selling scandal.
Despite the profit downturn, the bank noted good business performance, including continued net lending growth and reductions in operating expenses driven by simplification and automation. Operating expenses before credit impairment charges decreased by 7%, and the cost-to-income ratio (CIR) improved by 5 percentage points to 55%. However, these positive factors were largely offset by an overall increase in restructuring and specific provisions by £185 million, predominantly due to the motor finance redress.
Separately, the acquisition of TSB by Santander, valued at £2.65 billion (approximately €3.1 billion), is nearing completion following recent regulatory approval. This all-cash transaction, previously announced on July 1, 2025, will see Santander UK acquire TSB's approximately £34 billion in mortgages and £35 billion in customer deposits. The combined entity is projected to serve nearly 28 million retail and business customers nationwide, aiming to strengthen Santander's position in the UK market and accelerate its transformation. The acquisition is expected to generate cost synergies of at least £400 million, or 13% of the combined business's cost base, with restructuring costs of £520 million anticipated in 2026 and 2027.
