Santander UK recorded a surge in provisions as the bank powered forward with its transformation strategy slashing its branch network and shedding workers.
The bank said provisions for other liabilities and charges were up 74 per cent to £249m driven by “higher transformation related charges”. The lender listed losses and provisions as rising 119.8 per cent to €340m (£296m).
On the back of strategy changes, operating expenses fell two per cent in the first half “due to simplification and automation” after the firm shed 2,000 workers over the course of the last 12-months.
The number of UK branches reduced by 5.4 per cent annually to 420.
This follows a 69 per cent spike in provisions in the first quarter of 2025 to £140m, amid fierce backlash to the bank’s shuttering of branches.
Pre-tax profit for the first half took a £40m hit to £764m as the provisions mounted.
This comes amid a wider strategy from the lender as its streamlines operations and piles investment into tech ambitions.
Santander UK closed 95 branches in June 2025 as it turned to a “community bankers scheme” to provide areas with in-person support.
Santander hit by stamp duty changes
Santander snapped up TSB Bank at the beginning of July in a deal which is expected to top £2.9bn.
Chief executive Mike Regnier said the agreement “accelerates our transformation, allowing us to enhance our customer proposition and invest more in innovative products and our digital offering.”
Elsewhere, the firm’s net interest margin – a key metric indicating a bank’s profitability from lending – reduced by eight basis points quarter-on-quarter.
This was driven by a rise in customers paying off their loans or mortgages before the scheduled due date in the first quarter in a bid to beat changes to the stamp duty threshold, which came into effect on March 31.
Mortgage loans were flat at £167.2bn despite a higher gross mortgage lending of £10.6bn compared to £7.4bn in the first half of 2024.
Net interest income rose five per cent to £2.2bn. Meanwhile, non-interest income tumbled 12 per cent to £172m.
The firm is among top British lenders – including Lloyds and Close Brothers – awaiting Friday’s landmark Supreme Court ruling on the motor finance scandal. The bank is on the hook for £295m for its operations in the sector but is speculated to spin off its litigation-hit division as a part of the its operations overhaul.