Cost-cutting drive and legal risks weigh on half-year results; mortgage lending up
Santander UK reported a 5% decline in pre-tax profit to £764 million for the first half of 2025, as the high street lender pressed ahead with a major cost-cutting programme that has resulted in more than 2,000 job losses.
The reduction in workforce is part of Santander’s ongoing “simplification and automation” strategy, aimed at driving further efficiencies through 2025.
The latest round of job cuts follows an announcement last October to remove over 1,400 roles across its UK operations in 2024, and a warning in March that a further 750 positions were at risk. The bank also plans to close 95 branches and reduce hours at around 50 sites as it continues to streamline operations.
The bank is also facing uncertainty over a forthcoming Supreme Court ruling related to the car finance commission scandal. Santander UK has set aside £295 million for potential compensation, but warned that the final cost could change depending on the outcome and any subsequent action from the Financial Conduct Authority.
Santander UK’s half-year results showed gross mortgage lending rose 43% to £10.6 billion, but the overall mortgage book remained unchanged at £167.2 billion. The lender’s new business saw an average loan size of £250,000, up slightly from £246,000 at the end of December.
Borrower composition included 41% homemovers, 28% remortgagers, 22% first-time buyers, and 9% landlords. The proportion of home loans in arrears for more than 90 days fell to 0.74%, compared to 0.80% at the end of last year.
Earlier in July, Banco Santander, the Spanish parent company of Santander UK, agreed to acquire TSB from Banco Sabadell for £2.65 billion. The deal, expected to complete in the first quarter of 2026, will make Santander UK the fourth-largest mortgage lender in the country. TSB’s mortgage portfolio stands at £34 billion, representing a 2% share of the UK market.
Mike Regnier, chief executive officer at Santander UK, said the acquisition would accelerate the bank’s transformation. “In the first six months of 2025, we continued to build momentum in our strategy to become the best bank for customers in the UK by investing in technology and service, and improving our processes and efficiency,” he said.
“Banco Santander’s recent agreement to acquire 100% of TSB from Sabadell accelerates our transformation, allowing us to enhance our customer proposition and invest more in innovative products and our digital offering. This is an excellent deal for customers, combining two strong and complementary banks.”
Want to be regularly updated with mortgage news and features? Get exclusive interviews, breaking news, and industry events in your inbox – subscribe to our FREE daily newsletter. You can also follow us on Facebook, X (formerly Twitter), and LinkedIn.
