3rd Quarter Results

Quarterly Management Statement

for the nine months ended 30 September 2026

Mahesh Aditya, Chief Executive Officer, commented:

9M-26 financial and business highlights

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

•       Launched new fixed-rate cash ISAs in August paying inflation-beating rates, and a market-leading £240 mass market switching incentive in September for our Everyday Current Account and Regular Saver.

•       Successful Edge Student Current Account campaign and new £50 offer for our 1I2I3 Mini Current Account, supporting our youngest customers as they build good financial habits for the future.

•       Unlocked the equivalent of 21,000 hours of additional coding capacity using AI software tools to build new products and services faster.

•       On track to modernise 80% of our branches by the end of 2026 as part of a substantial investment in our network.

9M-26 profit before tax decreased by £71m to £1,158m (9M-25: £1,229m), mainly due to the charge in Q1-26 relating to historical motor finance commission payments and higher restructuring costs, partly offset by TSB's contribution to profit before tax of £96m

•       Net interest income increased 17% and Banking NIM² increased to 2.31% (9M-25: 2.23%). This was mainly due to the inclusion of TSB's higher NIM, partly offset by higher cost of deposits due to our focus on growth in a competitive market, mitigated by our structural hedge.

•       Operating expenses were up 8%, due to the inclusion of TSB's costs, partly offset by ongoing simplification and automation.

•       CIR² of 52% improved 5pp, due to income growth and increased operational efficiency.

•       Credit impairment charges were up £192m, mainly due to the acquisition of TSB, including a day 1 charge of £62m as previously disclosed. Credit impairment charges also increased due to a deterioration in the economic outlook reflecting macroeconomic uncertainty. Cost of risk² of 18bps (Dec-25: 10bps) up mainly due to the day 1 charge for TSB of 3bps.

•       Restructuring and specific provisions were up £361m, driven by a £179m increase in the provision charge in Q1-26 relating to historical motor finance commission payments and higher restructuring costs.

•       TSB's contribution to profit before tax from 1 May to 30 September 2026 of £96m. The Part VII business transfer application process is progressing well.

•       RoTE² of 10.6% (Dec-25: 10.0%) was up 0.6pp; the Q1-26 historical motor finance commission payments charge reduced this by 112bps.

Customer loans and deposits increased, reflecting continued broad based growth and the TSB acquisition; LDR of 105% (Dec-25: 105%)

•       Mortgage loans increased to £205.6bn (Dec-25: £169.0bn); mainly due to the inclusion of TSB; higher gross mortgage lending in 9M-26 of £23.4bn (9M-25: £17.9bn).

•       Customer deposits increased to £229.2bn (Dec-25: £190.2bn) mainly due to TSB, and with a continued flow into term savings.

•       Acquired TSB balances continue to remain broadly stable.

•       Asset quality remains good. Stage 3 ratio² of 0.90% down 27bps from Dec-25 (10bps due to high RWA mortgage sale); arrears remain low.

Strong capital, liquidity and funding; we remain focused on capital efficiency

•       CET1 capital ratio of 14.0% (Dec-25: 15.7%) as we optimised capital levels alongside the acquisition of TSB and resumed declaring dividends, supported by positive organic capital generation; UK leverage ratio of 4.8% (Dec-25: 5.1%).

•       2026 funding plan complete. Equivalent of £10.8bn in term issuance in 9M-26; we continue to maintain diversified and resilient wholesale funding.

•       LCR increased to 175% (Dec-25: 166%) driven mainly by completion of the 2026 funding plan in Q3-26.

Outlook

•       We expect to see net lending growth 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 stabilise across 2026.

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

•       We reconfirm our published targets of increasing RoTE to 16%, with cost synergies of at least £400m, by the end of 2028.

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

Notes:

1          See Appendix 6 for more on the acquisition of TSB.

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

Income statement summary¹

9M-26 profit before tax was down 6% vs 9M-25

•       Net interest income increased 17% mainly due to the inclusion of TSB's higher NIM. This was partially offset by higher cost of deposits due to our focus on growth in a competitive market, mitigated by our structural hedge.

•       Non-interest income was up 51%, mainly due to the inclusion of TSB, and higher retail and corporate fee income, including in business banking.

•       Operating expenses were up 8%, due to the inclusion of TSB's costs of £327m, partly offset by a reduction due to ongoing simplification and automation.

•       Credit impairment charges were up £192m, mainly due to the acquisition of TSB, including a day 1 charge of £62m where accounting rules require non-credit impaired balances to be brought onto our books with a Stage 1 ECL provision. Credit impairment charges also increased due to a deterioration in the economic outlook reflecting macroeconomic uncertainty.

•       Restructuring and specific provisions were up £361m, driven by a £179m increase in the provision charge in Q1-26 relating to historical motor finance commission payments, and higher restructuring and integration costs, including £19m (Q1-25: £42m) relating to changes to our branch network⁴ in Q1-26.

TSB integration

•       TSB integration work is well underway and on track, supported by detailed plans and oversight by senior management and the Board.

•       Customer experience, customer retention and Consumer Duty are at the heart of our design and delivery plan.

•       As previously announced, we are planning to transfer TSB's banking business to Santander UK plc through a Court-approved banking business transfer scheme under Part VII of the Financial Services and Markets Act 2000. The process is overseen by the Court, with PRA and FCA involvement, to make sure customers and other stakeholders are treated fairly and not materially disadvantaged by the transfer. The Part VII transfer is separate from the proposed subsequent migration of TSB customer products and data onto Santander UK systems. We are engaging with both regulators ahead of making our application to the Court, with a directions hearing expected in November 2026.

•       On 1 October 2026, nearly 1,000 TSB colleagues in central functions transferred their legal employer to Santander UK plc. Many of these colleagues already worked closely with teams across both banks and we were delighted to officially welcome them to Santander UK plc.

1          TSB is included in the consolidated financial results from 1 May 2026.

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

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

4          See Q1-26 Quarterly Management Statement for more on changes to our branch network.

Balance sheet summary

Customer loans increased by £39.7bn in 9M-26, driven by continued broad based growth across segments and the acquisition of TSB

•       Mortgages increased due to higher gross lending, partially offset by the sale of £1.3bn of high RWA mortgages in H1-26.

•       Mortgages also increased by £33.9bn in May 2026 with the acquisition of TSB.

Customer deposits increased by £39.0bn in 9M-26, driven by continued broad based growth across segments and the acquisition of TSB

•       Opened more than 400,000 new Current accounts, driven by successful campaigns including the Edge Student Current Account, a market-leading £240 mass market switching incentive in September for our Everyday Current Account, and a £50 offer for our 1I2I3 Mini Current Account. September 2026 marked the highest number of personal current account openings in nearly a decade.

•       Savings increased as customers continued to lock in excess Current account balances to more attractive Savings products, such as successful ISA products, including new fixed-rate cash ISAs in August paying inflation-beating rates, as customers increasingly lock into longer-term products.

•       Current accounts and Savings also increased by £12.1bn and £20.9bn, respectively, in May 2026 with the acquisition of TSB.

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

Credit quality

Notes:

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

2 Accounting rules require credit impaired loans acquired as part of the TSB acquisition to be classified separately as Purchased or Originated Credit-Impaired (POCI).

Loans in Stage 1 increased, reflecting the TSB acquisition, and continued broad based growth; good underlying asset quality

•       Accounting rules require loans of £2.7bn classified by TSB as Stage 2 recognised in May 2026 as part of the TSB acquisition to be brought onto our books as Stage 1.

Loans in Stage 2 increased, due to the TSB acquisition

•       Loans in Stage 2 increased as £1.7bn of loans (including £1.5bn of mortgages), classified as Stage 2 by TSB and recognised by Santander UK as Stage 1 on acquisition, suffered a SICR by 30 September 2026.

•       Mortgage loans in Stage 2 increased for the reason above, partly offset by a decrease reflecting a sale of high RWA mortgages in H1-26.

•       CCB loans in Stage 2 decreased due to cases successfully completing probation periods (i.e. curing) and returning to Stage 1.

Loans in Stage 3 decreased

•       Mortgage loans in Stage 3 decreased mainly due to the sale of high RWA mortgages in H1-26.

•       Percentage of Credit cards arrears over 90 days past due increased reflecting maturing balance transfers.

•       CCB loans in Stage 3 were broadly flat.

Purchased or Originated Credit-Impaired (POCI)

•       Accounting rules require loans of £0.4bn (mainly mortgage loans and credit card balances) classified as credit impaired by TSB and recognised by Santander UK as part of the TSB acquisition to be classified separately as POCI.

ECL provision

•       ECL provision increased by £90m to £903m (Dec-25: £813m), mainly due to the acquisition of TSB, including a day 1 charge of £62m, where accounting rules require non-credit impaired balances to be brought onto our books with a Stage 1 ECL provision, as well as changes in our economic scenarios and weights reflecting macroeconomic uncertainty. This was partly offset by the sale of high RWA mortgages in H1-26.

•       9-month gross write-off utilisation of £219m largely driven by higher CCB write-offs (9M-25: £151m; 2025: £248m).

Notes:

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

Economic scenarios

Economic scenarios were updated for Q3-26 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, although much will depend on the scale and duration of energy price increases and their impact on the wider economy.

•       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 stronger economic growth, driven by an improvement in the supply side of the economy.

•       There were no changes to weights in Q3-26 and Q2-26. Weights were updated in Q1-26 to reflect increased 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 Q3-26 forecast used for ECL calculation.

2          GDP, HPI and CRE start is taken from the level at Q2-26.

Capital, liquidity and funding

Capital ratios well above regulatory requirements, with positive organic capital generation

•       CET1 capital ratio decreased to 14.0% as we optimised capital levels alongside the acquisition of TSB and resumed declaring dividends, supported by positive organic capital generation.

•       UK leverage exposure increased to £283.2bn (Dec-25: £251.7bn) mainly due to the acquisition of TSB.

•       RWAs increased to £80.7bn, mainly due to the acquisition of TSB.

Strong liquidity position

•       LCR increased to 175% (Dec-25: 166%) driven mainly by completion of the 2026 funding plan in Q3-26.

•       LCR eligible liquid assets surplus of £25.7bn to regulatory requirements.

•       LCR eligible liquidity pool of £60.6bn (Dec-25: £51.0bn), includes £46.0bn cash and central bank reserves (Dec-25: £31.7bn).

Diversified funding across well-established issuance programmes

•       LDR of 105% (Dec-25: 105%).

•       Issued £10.8bn Sterling equivalent term issuance in 9M-26, including Covered bonds, RMBS, AT1 and Senior Unsecured issuances².

•       TFSME outstanding balance of £4.5bn at Sep-26 , of which £2.9bn is due for repayment in 2027 and £1.6bn is due in 2031.

•       2026 funding plan complete.

Structural hedge evolution

•       Our structural hedge position increased to £119bn at Sep-26 (Dec-25: £103bn) driven by the acquisition of TSB.

•       Weighted average duration of 2.6 years at Sep-26 (Dec-25: 2.3 years) was up as we extended the duration to enhance income stability.

•       Gross average yield from the structural hedge in 9M-26 was 3.19% (9M-25: 2.57%); with Q3-26: 3.34%, Q2-26: 3.19% and Q1-26: 3.01%.

•       Structural hedge gross yields remained supportive in Q3-26, partially offsetting continued pressure on customer margins and deposit mix.

•       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 9M-26, Santander UK completed two new SRTs (2025: four).

•       9M-26 SRTs 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 (9M-26: £223,884m; 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 (9M-26: £217,262m; 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.

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

•       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 Regulatory fees and levies (including 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 £29.7bn in 9M-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.

Appendix 4 - Capital

Regulatory capital requirements

Capital generation

Following completion of the acquisition of TSB, we resumed declaring dividends.

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:

Term issuance

Appendix 6 - Other

Acquisition of TSB

Historical motor finance commission payments

Payment Protection Insurance claim

Board changes

Further to the 2026 Half Yearly Financial Report published on 7 August 2026, Angel Santodomingo has agreed to remain as Chief Financial Officer and Executive Director until 31 December 2026, rather than 31 October 2026. Tom Ranger will then be appointed as Chief Financial Officer and Executive Director from 1 January 2027.

Additional information about Santander UK and Banco Santander

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