Santander UK profits fall as bank lowers economic growth outlook

Independent

30-04-2025

Santander has revealed lower profits in the UK as it set aside more cash to cover costs related to cutting its high street branches, and lowered its outlook for economic growth this year.
The UK bank said it was making some big changes to how the business is run in order to reduce costs.
It reported a pre-tax profit of £358 million for the first quarter, between January and March, which was 8% lower than the same period a year ago.
Mike Regnier, Santander UK's chief executive, said that 'charges relating to changes to our branch network' drove profits lower in recent months.
This has involved it putting aside more cash to cover charges and business expenses that come with the overhaul – with total provisions rising 69% to £140 million for the quarter.
Last month, the Spanish-owned banking giant said it was shutting 95 of its 444 branches across Britain from June, while also cutting hours across 36 sites and switching 18 to be counter-free.
Some 750 staff will be placed at risk of redundancy as a result of the move.
It said the changes will 'enable the bank to better serve the changing needs of its customers', as it also highlighted that customers were continuing to opt for digital banking over 'traditional' channels.
It has also been pushing ahead with simplifying and automating parts of the business which it expects to lead to cost-savings over 2025.
Meanwhile, Santander said it was keeping a close eye on increasing geopolitical risks and the potential impact on its customers.
It comes as Banco Santander, the wider group which incorporates its international operations, said the first three months of the year had been 'characterised by growing uncertainty caused by certain geopolitical tensions', mainly tariff policies in the US and increased defence spending in Europe.
New projections by the bank show UK economic growth is expected to be slower this year than previously forecast.
The 'base case' scenario shows gross domestic product (GDP) falling to 0.8% this year, from 1.4% growth forecast in February.
GDP will then rise to 1.3% in 2026, also lower than the 1.6% previously forecast.
The downgrade reflects weaker growth over the second half of the year and reduced consumer and business confidence.
In a worst-cast scenario, which could happen if investment weakens, global risks increase, and the UK labour force shrinks, GDP could drop by as much as 2.8% this year, according to the bank.
Mr Regnier said that, 'looking ahead, we will look to build on our positive momentum and will continue to work closely with Banco Santander to ensure that we harness the benefits of being part of a global business'.