Santander has revealed annual profits tumbled by nearly 40% in the UK as speculation continues to swirl over the future of the British business.
The Spanish-owned high street banking giant reported a 38% drop in pre-tax profits to £1.33 billion for 2024 after taking a hit from provisions for possible motor finance mis-selling and higher savings rates.
It comes as questions remain over the future of the UK business, despite efforts by Spanish owner Banco Santander to quash rumours the lender is considering pulling out of the UK.
Santander executive chair Ana Botin insisted recently “we love the UK” and said again on presenting results on Wednesday that Britain remains a “core market” for the firm.
But it is understood a sale of the high street bank would still be considered if a buyer came forward with a high enough offer, according to the Financial Times.
Reports first emerged last month that it was considering quitting the UK, with the British arm seen on a weaker footing than in other locations in Europe and a potential crisis facing the motor finance sector also looming over the UK bank.
Santander UK’s annual profit tumble follows the group’s move to put by £295 million in its third quarter to cover potential payouts as well as legal costs following a major court decision on car finance commission last autumn.
The group’s result was also affected by the high cost of savings products and a rush of demand earlier in the year, although the group cut rates later in 2024 to make them less attractive.
It also saw fourth quarter profits drop 8% on a year earlier to £383 million.
Mortgage lending fell 5% to £167.2 billion, while customer deposits also decreased by 5% to £183.4 billion.
But the group forecast a “gradual return” to growth in mortgage lending over the year ahead as it pencilled in more interest rate cuts, which it expects will see the base rate fall to 3.75% by the end of 2025.
Annual house price growth will ease to 3% from 4.5% in 2024, it added.
Mike Regnier, chief executive of Santander UK, said: “While challenges remain, and there have been mixed signals about the UK’s recent economic performance, the outlook for our business has improved.
“We will continue to work with Banco Santander to harness the best of our local and global capabilities.”
The wider Banco Santander group reported a 16% jump in pre-tax profits to 19.03 billion euros (£15.83 billion) as revenues climbed 7.8%.
It unveiled a new plan to buy back 10 billion euros (£8.32 billion) worth of shares from 2025 and 2026 earnings.
In the UK, the group said “transformation through simplification and automation of our business” would drive down costs.
Banco Santander revealed last October that the group was cutting more than 1,400 jobs across its UK business in 2024 amid ongoing efforts to reduce costs.
