Santander to cut UK jobs, close branches despite record group profit

(Sharecast News) - Santander UK announced it was cutting more than 2,000 jobs and closing more branches on Wednesday as part of a sweeping cost-reduction programme, coinciding with a 5% fall in first-half pre-tax profit to £764m. The cuts, driven by a push for greater automation and simplified operations, reflected the bank's ongoing transformation amid changing customer behaviour and mounting competitive pressures.

Its UK workforce reduction followed earlier announcements that more than 1,400 roles were to be eliminated in 2024, with around 750 more at risk following the closure of 95 branches and reduced hours at 50 additional sites.

UK chief executive Mike Regnier said the restructuring supported Santander's ambition "to become the best bank for customers in the UK" by investing in technology, service, and operational efficiency.

Despite the UK unit's earnings decline, Banco Santander, the bank's Spanish parent, posted a record attributable profit of €6.83bn for the first half of 2025, up 13% year-on-year.

Group earnings per share rose 19% to 43 euro cents, while return on tangible equity reached 16%, buoyed by growth in customer activity, record net fee income and continued cost discipline.

The firm said group operating expenses declined by 0.4%, aided by digital transformation and the rollout of a unified cloud-based banking platform, which has already saved the bank nearly €550m since late 2022.

Its efficiency ratio improved to 41.5%, the best in over 15 years.

Santander added eight million new customers over the past year, bringing its global total to 176 million.

Group deposits rose 4% and mutual fund assets increased 17% in constant euros, while overall loan growth remained modest at 1%.

The parent company's £2.65bn agreement to acquire TSB from Sabadell was positioned as a key strategic move to enhance its UK offering.

Regnier said the deal "accelerates our transformation" and would enable greater investment in digital services and product innovation.

Santander said it expected the transaction to add more than 20% return on investment and lift earnings per share by 4% by 2028.

Group executive chair Ana Botín described the TSB acquisition and the concurrent sale of Santander Poland as "value accretive capital redeployment", reinforcing the bank's focus on profitable growth.

"We are on track to meet all our targets for the year," she said, citing strong diversification and operational delivery.

Santander UK was also facing potential financial exposure from a forthcoming UK Supreme Court ruling on car finance commission payments.

The decision, expected this Friday, could determine whether banks would need to compensate affected customers in line with proposals from the Financial Conduct Authority.

Despite current challenges, Santander UK was expecting a gradual return to net mortgage lending in the second half of 2025, supported by a healthy pipeline.

At 1206 CEST (1106 BST), shares in Banco Santander were down 2.01% in Madrid, at €7.56.

Reporting by Josh White for Sharecast.com.