Quarterly Management Statement

for the three months ended 31 March 2026

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mahesh Aditya, Chief Executive Officer, commented:

 

Focus on providing our customers with products and services that meet their needs

•       Delivered new products and services, including the market leading 'My First Mortgage' increasing affordability for first time buyers.

•       Scaled AI across the bank, upskilling colleagues, strengthening fraud detection and delivering sharper market insights for corporate customers.

•       Enhanced our mobile App for our 7.4 million digital customers and progressed branch network changes to better support customers across all channels.

 

Q1-26 profit before tax decreased by £156m to £202m (Q1-25: £358m), mainly due to a £179m provision charge in Q1-26 relating to historical motor finance commission payments, partly offset by lower costs driven by simplification and automation

•       Banking NIM² of 2.22% was down 8bps (Q1-25: 2.30%), due to higher cost of deposits, partially offset by our structural hedge.

•       Net interest income decreased 2%, for similar reasons.

•       Operating expenses⁴ were down 7%, driven by simplification and automation.

•       CIR^{2, 4} of 55% was down 5pp, due to lower operating expenses.

•       Credit impairment charges were up £21m, trending to pre-pandemic levels as previously guided. Cost of risk² of 11bps (Dec-25: 10bps).

•       Restructuring and specific provisions⁴ were up £185m, mainly due to an increase in the provision charge in Q1-26 relating to historical motor finance commission payments, partly offset by lower transformation related charges.

•       RoTE² of 10.4% (Dec-25: 10.0%) was up 40bps; the historical motor finance commission payments charge reduced this by 106bps.

 

Customer loans and deposits increased, with continued broad based growth; LDR of 106% (Dec-25: 105%)

•       Mortgage loans increased to £170.2bn (Dec-25: £169.0bn); higher gross mortgage lending in Q1-26 of £6.4bn (Q1-25: £5.8bn).

•       Customer deposits increased slightly by £0.3bn in Q1-26 to £190.5bn (Dec-25: £190.2bn) with a continued flow into term savings.

•       Asset quality remains good. Stage 3 ratio³ of 1.15% improved 2bps from Dec-25; arrears remain low.

 

Strong liquidity and funding, with our capital position maintaining significant buffers to regulatory requirements

•       CET1 capital ratio stable at 15.7% (Dec-25: 15.7%) with retained earnings offset by growth in RWAs from customer lending, and pension contributions; UK leverage ratio of 5.1% (Dec-25: 5.1%).

•       Equivalent of £6.1bn in term issuance in Q1-26; we expect to issue £8.0 to 12.0 bn in total for the year.

•       LCR of 162% (Dec-25: 166%), decreased largely due to growth in customer lending.

 

Our 2026-28 Strategic plans and KPIs

•       Santander UK will set out its strategy and KPIs for 2026-28 after the completion of the proposed acquisition of TSB.

•       Our strategic plan and KPIs for 2026-28 are expected to address growing our customer base and deepening relationships, growing revenue and reducing costs each year (improving our CIR and increasing profit), increasing RoTE, and maintaining capital strength.

 

Outlook³

•       We expect to see net lending growth continue in 2026.

•       Banking NIM is expected to be stable in 2026. We continue to manage our structural hedge position for income stability.

•       Cost of risk is expected to continue to trend up towards pre-pandemic levels, as previously guided.

•       We expect further cost efficiencies in 2026, driven by simplification and automation of our business.

•       We continue to monitor risks from geopolitical events, including the conflict in the Middle East, and the potential effects on inflation.

 

Notes:

1          See Appendix 7 for more on Santander's agreement to acquire TSB.

2          Non-IFRS measure. See Appendix 1 for details.

3          Does not reflect any impact of the proposed acquisition of TSB.

4          See Appendix 8 for details of the Change in accounting policy.

 

Income statement summary

 

 

Q1-26 profit before tax was down 44% vs Q1-25

•       Net interest income decreased 2% due to higher cost of deposits, partially offset by our structural hedge.

•       Non-interest income³ was up 70%, mainly due to higher retail and corporate fee income, including in business banking.

•       Operating expenses³ were down 7%, driven by simplification and automation.

•       Credit impairment charges were up £21m, due to a deterioration in economic outlook in our Base Case economic scenario and an update to weights to reflect the growing downside risks to the UK economic outlook, trending to pre-pandemic levels after a period of write-backs, as previously guided.

•       Restructuring and specific provisions³ were up £185m, mainly due to an increase in the provision charge relating to historical motor finance commission payments, partly offset by lower transformation related charges, including £19m (Q1-25: £42m) relating to changes to our branch network⁴.

 

Historical motor finance commission payments

On 30 March 2026, the FCA published its Policy Statement PS26/3: Motor finance consumer redress scheme. Following its assessment of the final scheme rules, which include several changes to the proposals in the Consultation, Santander UK has decided not to challenge the scheme and to focus on its implementation in order to bring greater certainty to its customers. Santander UK has updated its scenarios and assumptions including operational and legal costs. This has resulted in an additional charge of £179m, increasing the total provision to £633m at 31 March 2026, at the upper end of the previously assessed range. Santander UK will continue to keep the provision under review. The ultimate financial impact could differ based on any future legal or regulatory developments.

Notes:

1          Comprises 'Net fee and commission income', 'Other operating income' and 'Regulatory fees and levies'.

2          Non-IFRS measure. See Appendix 1 for details.

3          See Appendix 8 for details of the Change in accounting policy.

4          See Appendix 8 for more on Transforming our branch network.

 

Balance sheet summary¹

 

 

 

Prudent approach to risk evident across our customer loan portfolio, with continued broad based growth

•       Mortgages: higher gross mortgage lending in Q1-26 of £6.4bn (Q1-25: £5.8bn).

•       Credit Cards: 55% (Dec-25: 54%) of customers repay their full balance each month.

•       Unsecured Personal Loans: average customer balance of £6k (Dec-25: £6k).

•       Overdrafts: relatively small balance of £0.4bn (Dec-25: £0.4bn).

•       Business Banking: includes £0.5bn (Dec-25: £0.6bn) of BBLS with 100% Government guarantee.

•       Consumer Finance: 98% (Dec-25: 98%) of lending is collateralised on the vehicle.

•       CCB: customers remain largely resilient with an overall improvement in asset quality.

 

 

Customer deposits increased by £0.3bn in Q1-26, with continued broad based growth

•       Savings increased as customers looked to lock in excess Current account balances to more attractive Savings products.

•       Corporate & Commercial Banking reduced, due to market competition. We have a pipeline in place to support future growth.

 

Notes:

1          See Appendix 6 for detailed balance sheet.

 

Credit quality

 

 

 

Loans in Stage 2 and Stage 3 were broadly stable overall, highlighting underlying asset quality

•       Mortgage loans in Stage 2 increased reflecting normal growth following the asset sale in Q3-25. Stage 3 decreased slightly due to a reduction in late arrears.

•       CCB loans in Stage 2 decreased due to cases successfully completing probation periods and returning to Stage 1. Stage 3 also decreased due to cases curing or being written off.

 

ECL provision

•       ECL provision increased by £14m to £827m (Dec-25: £813m), mainly due to changes in our economic scenarios reflecting recent geopolitical developments.

•       3-month gross write-off utilisation of £63m largely driven by higher CCB write-offs in Q1-26 (Q1-25: £48m; 2025: £248m).

 

 

Notes:

1          Non-IFRS measure. See Appendix 1 for details.

 

Economic scenarios

 

Economic scenarios were updated for Q1-26 to reflect the latest market data, including expectations for inflation and Bank Rate

•       The Base Case was updated to reflect recent events in the global economy. These are expected to result in higher inflation and Bank Rate paths than previously expected. Weaker growth and higher unemployment is also anticipated.

•       The Downside scenarios capture a range of risks, including further escalation of geopolitical events, continuing weaker investment (reflecting the unstable environment and higher cost of employment), a continuing and significant mismatch between job vacancies and skills (as well as a smaller labour force) and a return to upside inflation surprises causing interest rates to remain at higher levels for longer.

•       The Upside scenario incorporates a quicker economic performance, driven by an improvement in the supply side of the economy.

•       Weights were updated to reflect the growing downside risks to the UK economic outlook. The Downside 1 weight was increased by 5%, and the Base Case weight was decreased by 5%.

 

 

Notes:

1          Our Q1-26 forecast used for ECL calculation.

2          GDP, HPI and CRE start is taken from the level at Q4-25.

 

Capital, liquidity and funding

 

 

Capital ratios well above regulatory requirements

•       CET1 capital ratio stable at 15.7% with retained earnings offset by growth in RWAs from customer lending, and pension contributions, as well as a no-dividend accrual decision in anticipation of the proposed acquisition of TSB by Santander UK.

•       UK leverage exposure decreased to £249.9bn (Dec-25: £251.7bn) due to active management of leverage balances.

 

Strong liquidity position

•       Strong LCR of 162% (Dec-25: 166%), decreased largely due to growth in customer lending.

•       LCR eligible liquid assets surplus of £20.1bn to regulatory requirements.

•       NSFR of 137% (Dec-25: 135%).

•       LCR eligible liquidity pool of £53.2bn (Dec-25: £51.0bn), includes £32.0bn cash and central bank reserves (Dec-25: £31.7bn).

 

Diversified funding across well-established issuance programmes

•       LDR of 106% (Dec-25: 105%), increased slightly, driven by growth in both loans and deposits.

•       Issued £6.1bn Sterling equivalent term issuance in Q1-26, including AT1, T2, Covered Bond, RMBS and Senior Unsecured issuances².

•       TFSME outstanding balance of £3.9bn at Mar-26, of which £2.5bn is due for repayment in 2027 and £1.4bn is due in 2031.

•       We expect to issue £8.0 to 12.0 bn of term issuance in 2026, including the £6.1bn issued in Q1-26.

 

Structural hedge evolution

•       Santander UK plc's structural hedge position decreased to £101bn at Mar-26 (Dec-25: £103bn), with a duration of 2.5 years (Dec-25: 2.3 years).

•       We continue to manage our structural hedge position for income stability.

 

Significant Risk Transfers (SRTs)

•       As part of our strategy aimed at driving balance sheet optimisation, in Q1-26, Santander UK completed one new SRT (2025: four).

•       Q1-26 SRT covered Corporate & Commercial Banking assets (2025: Retail & Business Banking, Corporate & Commercial Banking and Consumer Finance assets).

 

Notes:

1          Non-IFRS measure. See Appendix 1 for details.

2          See Appendix 5 for more on our 2026 funding plan.

 

Appendix 1 - Non-IFRS measures

 

Non-IFRS measures and their calculations

 

•       Banking NIM: Annualised net interest income divided by average customer loans for the period (Q1-26: £201,281m; Dec-25: £198,779m).

•       Cost of risk: Sum of credit impairment charges for the last 12-month period as a percentage of average customer loans for the last 12 months (Q1-26: £201,281m; Dec-25: £198,779m).

•       CIR: Total operating expenses before credit impairment charges, and restructuring and specific provisions as a percentage of the total of net interest income and non-interest income.

•       Non-interest income: Net fee and commission income plus other operating income and regulatory fees and levies.

•       Stage 1 ratio: Sum of Stage 1 drawn assets divided by the sum of total drawn assets.

•       Stage 2 ratio: Sum of Stage 2 drawn assets divided by the sum of total drawn assets.

•       Stage 3 ratio: Sum of Stage 3 drawn and undrawn assets divided by the sum of total drawn assets and Stage 3 undrawn assets.

•       RoTE: Profit after tax attributable to equity holders of the parent, divided by average shareholders' equity less average AT1 securities and average goodwill and other intangible assets.

•       Wholesale funding: Deposits by banks reported in Corporate Centre, debt securities in issue, subordinated liabilities, AT1 issuance and Central Bank facilities, including TFSME and Indexed Long-Term Repos used for funding.

 

Movement in Banking NIM

 

 

 

•       Loan margins: Customer rate less relevant risk-free rate.

•       Structural deposit margins: Customer rate less gross structural hedge yield.

•       Fixed and variable deposit margins: Customer rate less applicable swap rate or Bank Rate for fixed rate and variable rate deposits respectively.

•       Funding, liquidity & other: Mainly wholesale funding coupon less Bank Rate or SONIA, and income from the eligible liquidity pool.

 

Appendix 1 - Non-IFRS measures continued

 

RoTE Overview

 

 

Phasing adjustment relates to charges for the Bank of England Levy and Restructuring and specific provisions.

 

Appendix 2 - Interest rate risk

 

The table below shows how our net interest income would be affected by a parallel shift (both up and down) applied instantaneously to the yield curve. Sensitivity to parallel shifts represents the amount of risk in a way that we think is both simple and scalable.

 

 

Notes:

1          Based on modelling assumptions of repricing behaviour.

 

Appendix 3 - Mortgages

 

 

 

 

 

 

Internal transfers of £10bn in Q1-26. Internal transfers relate to current customers switching from one product to another.

 

Notes:

1          Home movers include both existing customers moving house and taking out a new mortgage with us, and customers who switch their mortgage to us when they move house.

2          Remortgagers are new customers who are taking a new mortgage with us.

3          Average initial advance of existing stock.

 

Appendix 4 - Capital

 

Regulatory capital requirements

 

 

 

 

Distance to MDA/excess for CET1 capital, total capital and MREL ratios are measured on HoldCo requirements and exclude a 1.0% RFB systemic buffer and a 0.35% additional leverage ratio buffer.

 

Capital generation

 

 

In anticipation of the proposed acquisition of TSB by Santander UK, no dividend was accrued.

Appendix 5 - Funding

 

 

Wholesale funding excludes Foreign exchange and hedge accounting, and Other (including accrued interest). Total wholesale funding consists of items classified in the balance sheet as Financial liabilities at amortised cost, Financial liabilities designated at fair value, and Other equity instruments.

 

Of which:

 

 

 

 

Appendix 6 - Balance sheet

 

Balance sheet information

 

 

 

Appendix 7 - Santander's acquisition of TSB from Sabadell

 

Proven integration capability

 

Appendix 8 - Other

 

Transforming our branch network

 

Change in accounting policy

 

List of abbreviations

 

Additional information about Santander UK and Banco Santander

Santander UK is a financial services provider in the UK that offers a wide range of personal and commercial financial products and services. The bank serves its customers via a nationwide branch network, telephone, mobile and online banking. Santander UK is subject to the full supervision of the FCA and the PRA in the UK. Santander UK plc customers' eligible deposits are protected by the FSCS in the UK.

 

Banco Santander (SAN SM, STD US, BNC.LN) is a leading commercial bank, founded in 1857 and headquartered in Spain and one of the largest banks in the world by market capitalisation. The group's activities are consolidated into five global businesses: Retail & Commercial Banking, Digital Consumer Bank, Corporate & Investment Banking (CIB), Wealth Management & Insurance and Payments (PagoNxt and Cards). This operating model allows the bank to better leverage its unique combination of global scale and local leadership. Banco Santander aims to be the best open financial services platform providing services to individuals, SMEs, corporates, financial institutions and governments. The bank's purpose is to help people and businesses prosper in a simple, personal and fair way.

 

Banco Santander has a listing of its ordinary shares on the London Stock Exchange and Santander UK plc has preference shares listed on the London Stock Exchange.

 

Contacts

 

Basis of presentation

The information in this statement is unaudited and does not comprise statutory accounts within the meaning of section 434 of the Companies Act 2006 (the Act). The statutory accounts for the year ended 31 December 2025 have been filed with the Registrar of Companies. The report of the auditor on those statutory accounts was unqualified, did not draw attention to any matters by way of emphasis and did not contain a statement under section 498(2) or (3) of the Act.

 

This statement provides a summary of the unaudited business and financial trends for the three months ended 31 March 2026 for Santander UK Group Holdings plc and its subsidiaries (Santander UK), including its principal subsidiary Santander UK plc. The unaudited business and financial trends in this statement only pertain to Santander UK on a statutory basis. Unless otherwise stated, references to results in previous periods and other general statements regarding past performance refer to the business results for the same period in 2025.

 

This statement contains non-IFRS financial measures that are reviewed by management in order to measure our overall performance. These are set out in Appendix 1. A list of abbreviations is included in Appendix 8 and a glossary of terms is available at: https://www.santander.co.uk/about-santander/investor-relations/glossary

 

Disclaimer

Santander UK Group Holdings plc (Santander UK) and Banco Santander caution that this announcement may contain forward-looking statements. Such forward-looking statements are found in various places throughout this announcement. Words such as "believes", "anticipates", "expects", "intends", "aims" and "plans" and other similar expressions are intended to identify forward-looking statements, but they are not the exclusive means of identifying such statements. Forward-looking statements include, without limitation, statements concerning our future business development and economic performance. These forward-looking statements are based on management's current expectations, estimates and projections, and Santander UK and Banco Santander caution that these statements are not guarantees of future performance. We also caution readers that a number of important factors could cause actual results to differ materially from the plans, objectives, expectations, estimates and intentions expressed in such forward-looking statements. We have identified certain of these factors in the forward-looking statements on page 234 of the Santander UK Group Holdings plc 2025 Annual Report. Investors and others should carefully consider the foregoing factors and other uncertainties and events. Undue reliance should not be placed on forward-looking statements when making decisions with respect to Santander UK, Banco Santander and/or their securities. Such forward-looking statements speak only as of the date on which they are made, and we do not undertake any obligation to update or revise any of them, whether as a result of new information, future events or otherwise. Statements as to historical performance, historical share price or financial accretion are not intended to mean that future performance, future share price or future earnings for any period will necessarily match or exceed those of any prior quarter.

 

Santander UK is a frequent issuer in the debt capital markets and regularly meets with investors via formal roadshows and other ad hoc meetings. In line with Santander UK's usual practice, over the coming quarter it expects to meet with investors globally to discuss this Quarterly Management Statement, the results contained herein and other matters relating to Santander UK.

 

Nothing in this announcement constitutes or should be construed as constituting a profit forecast.

 

None of the websites referred to in this Quarterly Management Statement, including where a link is provided, nor any of the information contained on such websites is incorporated by reference in this Quarterly Management Statement.