Santander UK (SNTUF) profit hit by motor finance charge after TSB deal
Santander UK plc reported half-year 2026 results shaped by the completed acquisition of TSB on 30 April, which added 4 million customers and 4,500 colleagues, making it a leading UK retail bank. Profit before tax was £517m, down 31% from £746m in H1-25, mainly due to a £179m provision charge in Q1-26 relating to historical motor finance commission payments and higher restructuring costs. Net interest income rose 8% to £2,369m, and non-interest income more than doubled to £130m, largely from TSB and stronger fee income, while operating expenses stayed broadly flat through simplification and automation. Credit impairment charges increased to £277m from £105m, including a day 1 £62m charge on acquired TSB balances, and TSB recorded a £25m pre-tax loss for May–June.
Customer loans grew to £235.3bn (from £197.4bn), with mortgages at £202.6bn, and customer deposits rose to £220.7bn (from £183.6bn), largely reflecting TSB plus broad-based growth. Asset quality remained strong, with a Stage 3 ratio of 0.86%, down 32bps since December 2025; arrears over 90 days were low across products. The total ECL allowance increased to £889m from £812m, driven by TSB and a weaker macroeconomic outlook. Capital and liquidity stayed robust, with a CET1 ratio of 14.2% (15.8% at December 2025), an LCR of 163%, and £6.8bn equivalent of term issuance. Management expects continued net lending growth, a stable net interest margin, and further cost efficiencies in 2026 while closely monitoring geopolitical and macroeconomic risks.
Positive
- TSB acquisition materially expanded scale, lifting customer loans to £235.3bn and deposits to £220.7bn while maintaining a low Stage 3 ratio of 0.86% and a strong CET1 capital ratio of 14.2%.
Negative
- Profit before tax fell 31% to £517m, driven by a £179m provision related to historical motor finance commission payments, higher restructuring costs, and increased credit impairment charges of £277m with total ECL rising to £889m.
Filing Explained
TSB is acquired, but its legal transfer and full risk-framework integration remain pending through the first half of 2027.
As a Form 6-K, this interim report furnishes material information from Santander UK’s home market. The TSB acquisition completed on
Until the planned transfer in the first half of
The next disclosed milestones are work to align TSB’s significant-increase-in-credit-risk criteria in the second half of
Key Figures
Profit before tax: £517m
Net interest income: £2,369m
Customer loans: £235.3bn
+5 more
8 metrics
Profit before tax
£517m
For the half year to 30 June 2026, down from £746m in H1-25
Net interest income
£2,369m
Half year to 30 June 2026, up 8% from £2,194m in H1-25
Customer loans
£235.3bn
As at 30 June 2026, up from £197.4bn at 31 December 2025
Customer deposits
£220.7bn
As at 30 June 2026, up from £183.6bn at 31 December 2025
CET1 capital ratio
14.2%
Capital ratio at 30 June 2026, compared with 15.8% at 31 December 2025
Stage 3 ratio
0.86%
Stage 3 loans ratio at 30 June 2026, down 32bps from December 2025
Liquidity Coverage Ratio
163%
LCR at 30 June 2026, slightly above 162% at 31 December 2025
Total ECL allowance
£889m
Total expected credit loss allowance at 30 June 2026, up from £812m
Key Terms
Stage 3 ratio, Common Equity Tier 1 (CET1) capital ratio, Liquidity Coverage Ratio (LCR), Expected Credit Loss (ECL), +2 more
6 terms
Stage 3 ratio financial
"Stage 3 ratio1 of 0.86% down 32bps from Dec-25; arrears remain low."
Common Equity Tier 1 (CET1) capital ratio financial
"CET1 capital ratio of 14.2% (Dec-25: 15.8%) as we optimised capital levels"
The common equity tier 1 (CET1) capital ratio measures a bank’s core capital—mainly common stock and retained earnings—against its assets after those assets are adjusted for risk. Think of it as the size of the bank’s financial cushion compared with the riskiness of what it owns; a higher CET1 ratio means a bigger cushion to absorb losses and generally signals greater safety for investors, though it can also affect returns.
Liquidity Coverage Ratio (LCR) financial
"LCR stable at 163% (Dec-25: 162%)."
A liquidity coverage ratio measures whether a bank holds enough cash and easily sold, high-quality assets to cover its expected net cash outflows for 30 days under stress. Think of it as a household emergency fund that proves the bank could pay its bills for a month without selling illiquid items at fire-sale prices. Investors use it to gauge short-term resilience, regulatory compliance, and the likelihood of funding strain.
Expected Credit Loss (ECL) financial
"The ECL approach estimates the credit losses arising from defaults in the next 12 months"
Purchased or Originated Credit-Impaired (POCI) financial
"POCI assets are financial assets that are credit-impaired at the date of acquisition"
Significant Increase in Credit Risk (SICR) financial
"loans which have suffered a SICR since origination are subject to a lifetime ECL"
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FAQ
How did Santander UK plc (SNTUF) perform financially in H1 2026?
Santander UK plc reported profit before tax of £517m in H1 2026, down 31% from £746m a year earlier. Net interest income rose 8% to £2,369m, while non-interest income more than doubled to £130m, helped by the TSB acquisition.
What impact did the TSB acquisition have on Santander UK (SNTUF)?
The TSB acquisition added around 4 million customers and 4,500 colleagues, helping lift customer loans to £235.3bn and deposits to £220.7bn. It also contributed to higher net interest and fee income, alongside a one-off day 1 credit impairment charge of £62m.
Why did credit impairment charges increase at Santander UK (SNTUF)?
Credit impairment charges rose to £277m from £105m, mainly due to the TSB acquisition, including a day 1 £62m Stage 1 ECL on acquired balances. Additional increases reflected a weaker economic outlook linked to global geopolitical and macroeconomic developments.
How strong is Santander UK’s (SNTUF) capital and liquidity position as of 30 June 2026?
Santander UK reported a CET1 capital ratio of 14.2%, down from 15.8% at December 2025 but with significant buffers over regulatory requirements. Liquidity remained solid with an LCR of 163%, supported by £6.8bn equivalent of term issuance in H1 2026.
What is the asset quality picture for Santander UK (SNTUF) in H1 2026?
Asset quality remained good, with a Stage 3 ratio of 0.86%, 32bps lower than December 2025, and low arrears over 90 days across portfolios. The total ECL allowance increased to £889m, reflecting TSB-related provisions and revised macroeconomic scenarios.
What outlook does Santander UK (SNTUF) provide for 2026?
Management expects continued net lending growth and a broadly stable net interest margin in 2026. Further cost efficiencies are anticipated from business simplification, automation, and TSB integration, while risks from geopolitical events and their impact on UK inflation and growth are being closely monitored.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16 under the
Securities Exchange Act of 1934
For the month of August, 2026
Commission File Number 001-14928
(Translation of registrant's name into English)
2 Triton Square,
Regent's Place,
London NW1 3AN, England
(Address of principal executive office)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
Form 20-F . . . .X. . . . Form 40-F . . . . . . . .
THE REGISTRANT HEREBY INCORPORATES ALL PARTS OF THIS REPORT ON FORM 6-K BY REFERENCE INTO REGISTRATION STATEMENT NO.
333-288263 FILED BY THE REGISTRANT WITH THE SECURITIES AND EXCHANGE COMMISSION ON FORM F-3ASR UNDER THE SECURITIES ACT
OF 1933.
This Report on Form 6-K contains references to websites of the registrant and its affiliates. The registrant is not incorporating by reference any information posted on
such websites.
Santander UK plc
Half Yearly Financial Report 2026
Important information for readers
Santander UK plc and its subsidiaries (collectively called Santander UK or the Santander UK group) operate primarily in the UK and are part of Banco Santander
(comprising Banco Santander SA and its subsidiaries). Santander UK plc is regulated by the UK Prudential Regulation Authority (PRA) and the Financial
Conduct Authority (FCA) and certain other companies within the Santander UK group are regulated by the FCA.
This Half Yearly Financial Report contains forward-looking statements that involve inherent risks and uncertainties. Actual results may differ materially from those
contained in such forward-looking statements. See ‘Forward-looking statements’ in the Shareholder information section.
None of the websites referred to in this Half Yearly Financial Report on Form 6-K for the six months ended 30 June 2026 (the Form 6-K), including where a link is
provided, nor any of the information contained on such websites, is incorporated by reference into the Form 6-K.
Santander UK plc1
Santander UK plc | ||||
Half Yearly Financial Report 2026 | ||||
Contents | ||||
CEO review | 2 | |||
Financial overview | 3 | |||
Risk review | 7 | |||
Financial statements | 44 | |||
Shareholder information | 70 | |||
Santander UK plc2
CEO review | Financial overview | Risk review | Financial statements | Shareholder information | |||||||||
CEO review
Mahesh Aditya, Chief Executive Officer, commented
“Following successful completion of the acquisition of TSB on 30 April, we were pleased to welcome 4 million customers and 4,500 colleagues to Santander UK,
making us the UK's third-largest bank by personal current accounts and fourth-largest mortgage lender. Our priority is to deliver a successful integration of TSB,
alongside our continued strategic focus on deepening customer relationships and operational efficiency, leveraging world class technology investment by Banco
Santander and the growing use of AI to better serve our customers.
Our H1-26 results show good business performance, with continued net lending growth as well as increased efficiency, driven by simplification and automation.
However, profit before tax decreased to £517m, mainly due to an increase in Q1-26 in the provision charge relating to historical motor finance commission
payments and higher restructuring costs.
Santander UK and TSB have 480 branches and, as I’ve travelled across the UK over the past few months speaking with branch colleagues, I have been
impressed with the excellent service they provide to customers who choose to bank with us that way. As we integrate TSB with Santander UK, our ambition for
customers is to combine leading digital services with the personal support they value, helping us to create the best bank for customers in the UK. I see branches
as an important part of our strategy and do not intend to close any additional Santander or TSB branches before 2028 at the earliest, alongside our continued
commitment to invest in modernising our network and to introduce new Work Cafés.”
H1-26 financial and business highlights
Focus on providing our customers with products and services that meet their needs
–Supported first-time buyers and savers with competitive and innovative new products, including the market-leading Regular Saver and the First Home Saver
linked to our My First Home mortgage.
–Our front-line teams used tailored AI solutions to support with 4.3 million customer phone calls.
–Proactively contacted 146,000 customers we expect to be most severely impacted by energy cost pressures, signposting support available.
H1-26 profit before tax decreased by £229m to £517m (H1-25: £746m), mainly due to the charge in Q1-26 relating to historical motor finance
commission payments and higher restructuring costs
–Net interest income increased 8%, due to the inclusion of TSB.
–Operating expenses2 were broadly flat as the inclusion of TSB’s costs was offset by ongoing simplification and automation.
–Credit impairment charges were up £172m 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 recent events in the global economy.
–Restructuring and specific provisions2 were up £274m, driven by a £179m increase in the provision charge in Q1-26 relating to historical motor finance
commission payments and higher restructuring costs.
–TSB loss before tax from 1 May to 30 June 2026 of £25m mainly due to the day 1 credit impairment charge of £62m noted above.
Customer loans and deposits increased, reflecting the TSB acquisition, and continued broad based growth
–Mortgage loans increased to £202.6bn (Dec-25: £167.3bn) mainly due to the inclusion of TSB; higher gross mortgage lending in H1-26 of £14.7bn (H1-25:
£10.6bn).
–Customer deposits increased to £220.7bn (Dec-25: £183.6bn) mainly due to TSB, and with a continued flow into term savings.
–Acquired TSB balances remained stable.
–Asset quality remains good. Stage 3 ratio1 of 0.86% down 32bps from Dec-25; (10bps due to high RWA mortgage sale); arrears remain low.
Strong liquidity and funding, with our capital position maintaining significant buffers to regulatory requirements; we remain focused on capital
efficiency
–CET1 capital ratio of 14.2% (Dec-25: 15.8%) as we optimised capital levels alongside the acquisition of TSB and resumed declaring dividends.
–Equivalent of £6.8bn in term issuance in H1-26; we continue to maintain diversified and resilient wholesale funding.
–LCR stable at 163% (Dec-25: 162%).
Outlook
–We expect to see net lending growth continue in 2026.
–Net interest margin is expected to be stable in 2026. We continue to manage our structural hedge position for income stability.
–We expect further cost efficiencies in 2026, driven by simplification and automation of our business, and integration of TSB.
–We continue to monitor risks from geopolitical events, including in the Middle East and the UK, and the potential impact on inflation.
Mahesh Aditya
Chief Executive Officer
1 See 'Calculations' in the Shareholder Information section for details.
2 See Note 1 for details of the Change in accounting policy.
Santander UK plc3
CEO review | Financial overview | Risk review | Financial statements | Shareholder information | |||||||||
Financial overview
Income statement review
SUMMARISED CONSOLIDATED INCOME STATEMENT
For the half year to
30 June 2026 | 30 June 2025 | |
£m | £m | |
Net interest income | 2,369 | 2,194 |
Non-interest income1, 2 | 130 | 64 |
Net operating income1 | 2,499 | 2,258 |
Operating expenses before credit impairment charges, restructuring and specific provisions2 | (1,339) | (1,315) |
Credit impairment charges | (277) | (105) |
Restructuring and specific provisions2 | (366) | (92) |
Total credit impairment charges, restructuring and specific provisions | (643) | (197) |
Profit before tax | 517 | 746 |
Tax on profit | (143) | (195) |
Profit after tax | 374 | 551 |
1 Comprises ‘Net fee and commission income’, ‘Other operating income’ and 'Regulatory fees and levies'.
2 See Note 1 for details of the Change in Accounting policy.
A more detailed Consolidated Income Statement is contained in the Condensed Consolidated Interim Financial Statements.
H1-26 profit before tax down 31% vs H1-25
–Net interest income increased 8%, 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 103%, mainly due to the inclusion of TSB, and higher retail and corporate fee income, including in business banking.
–Operating expenses were broadly flat as the inclusion of TSB’s costs was offset by a reduction of £94m due to ongoing simplification and automation.
–Credit impairment charges were up £172m, 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 recent events in the global economy.
–Restructuring and specific provisions3 were up £274m, driven by an £179m increase in the provision charge in Q1-26 relating to historical motor finance
commission payments and higher restructuring costs, including £19m (Q1-25: £42m) relating to changes to our branch network in Q1-26.
Santander UK plc4
CEO review | Financial overview | Risk review | Financial statements | Shareholder information | |||||||||
Balance sheet review
CUSTOMER BALANCES
This section analyses customer loans and customer deposits at a consolidated level and by business segment. The customer balances below exclude Joint
ventures and Other items, mainly accrued interest that we have not yet charged to the customer's account and cash collateral. A reconciliation between the
customer balances below and the total assets as presented in the Condensed Consolidated Balance Sheet is set out in the Risk review.
Balance sheet information
Assets | 30 June 2026 | 31 December 2025 |
£bn | £bn | |
Customer loans | 235.3 | 197.4 |
Loans to JVs, accrued interest, ECL and other | 5.1 | 5.2 |
Loans and advances to customers | 240.4 | 202.6 |
Cash at central banks | 38.3 | 29.4 |
Reverse repurchase agreements | 10.7 | 17.7 |
Other financial assets | 14.7 | 11.1 |
Other assets - non-interest earning | 8.2 | 6.0 |
Total assets | 312.3 | 266.8 |
Liabilities and Equity | 30 June 2026 | 31 December 2025 |
£bn | £bn | |
Customer deposits | 220.7 | 183.6 |
Deposits from JVs, accrued interest and other | 3.9 | 3.7 |
Deposits by customers | 224.6 | 187.3 |
Financial liabilities at amortised cost | 57.7 | 50.0 |
Repurchase agreements | 6.4 | 9.0 |
Other liabilities - non-interest bearing | 6.6 | 5.4 |
Total liabilities | 295.3 | 251.7 |
Shareholders' equity | 17.0 | 15.1 |
Total liabilities and equity | 312.3 | 266.8 |
For more analysis of credit risk on customer loans, see the Credit risk section of the Risk review. For an analysis of customer loans by segment, see the 'Credit
Performance' table in the Credit risk section of the Risk review.
Customer loans increased by £37.9bn in H1-26, driven by the acquisition of TSB and broad based growth across segments
–Mortgages increased by £33.9bn in May 2026 with the acquisition of TSB.
–Mortgages also increased due to higher gross lending, partially offset by the sale of £1.3bn of high RWA mortgages.
Customer deposits by segment
30 June 2026 | 31 December 2025 | |
£bn | £bn | |
Retail & Business Banking | 192.6 | 155.7 |
–Current accounts | 69.1 | 59.4 |
–Savings | 108.4 | 82.5 |
–Business Banking | 10.1 | 8.6 |
–Other retail products | 5.0 | 5.2 |
Corporate & Commercial Banking | 24.8 | 24.4 |
Corporate Centre | 3.3 | 3.5 |
Total | 220.7 | 183.6 |
Customer deposits increased by £37.1bn in H1-26, driven by the acquisition of TSB and broad based growth across segments
–Current accounts and Savings increased by £12.1bn and £20.9bn in May 2026 with the acquisition of TSB.
–Savings also increased as customers continued to look to lock in excess Current account balances to more attractive Savings products, as well as a
successful ISA season.
–Corporate & Commercial Banking increased, in a competitive market. We have a pipeline in place to support future growth.
Santander UK plc5
CEO review | Financial overview | Risk review | Financial statements | Shareholder information | |||||||||
Summary segmental information
SEGMENTAL ANALYSIS
With effect from 30 April 2026, we acquired TSB as described in Note 29 to the Condensed Consolidated Interim Financial Statements, which now forms part of
our Retail & Business Banking segment.
Customer loans | 30 June 2026 | 31 December 2025 |
£bn | £bn | |
Retail & Business Banking | 210.8 | 173.5 |
Consumer Finance | 5.0 | 5.0 |
Corporate & Commercial Banking | 19.5 | 18.9 |
Corporate Centre | — | — |
Total | 235.3 | 197.4 |
Customer deposits | 30 June 2026 | 31 December 2025 |
£bn | £bn | |
Retail & Business Banking | 192.6 | 155.7 |
Consumer Finance | — | — |
Corporate & Commercial Banking | 24.8 | 24.4 |
Corporate Centre | 3.3 | 3.5 |
Total | 220.7 | 183.6 |
RWA | 30 June 2026 | 31 December 2025 |
£bn | £bn | |
Total | 79.8 | 67.2 |
For the half year to
Profit/(loss) before tax | 30 June 2026 | 30 June 2025 |
£m | £m | |
Retail & Business Banking | 562 | 567 |
Consumer Finance | (160) | 55 |
Corporate & Commercial Banking | 146 | 126 |
Corporate Centre | (31) | (2) |
Total | 517 | 746 |
Retail & Business Banking
–Customer loans and deposits increased, reflecting the acquisition of TSB and continued growth.
–Profit before tax was down slightly, mainly due to the inclusion of TSB’s loss before tax of £25m since its acquisition, higher credit impairment charges and
restructuring costs. This was partially offset by higher income.
Consumer Finance
–Customer loans were stable, and we continue to focus on value and capital generation.
–Loss before tax mainly due to higher provision charges in Q1-26 in respect of historical motor finance commission payments.
Corporate & Commercial Banking
–Continued focus on high-value and international business.
–Profit before tax was broadly flat, as higher credit impairment charges were offset by cost discipline.
Corporate Centre
–Loss before tax increased, mainly due to integration related costs.
Principal risks and uncertainties
A description of our principal risks and uncertainties for the remaining six months of the financial year is set out in the Risk governance section of the Risk review,
mainly in Top risks and Emerging risks as well as a discussion of how the relevant risks and uncertainties have changed since our 2025 Annual Report was
published, including the impact of the acquisition of TSB. See also 'Risk Factors'.
Santander UK plc6
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Santander UK plc7
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Risk review | |||
In this section | |||
Risk governance | 8 | ||
Credit risk | 10 | ||
Liquidity risk | 31 | ||
Capital risk | 34 | ||
Market risk | 35 | ||
Pension risk | 36 | ||
Strategic and business risk | 37 | ||
Reputational risk | 38 | ||
Non-Financial Risks: | |||
Operational risk | 39 | ||
Economic crime risk | 41 | ||
Model risk | 42 | ||
Compliance risk | 43 | ||
Santander UK plc8
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Risk governance
INTRODUCTION
As a financial services provider, managing risk is a core part of our day-to-day activities. To manage our business effectively, it is vital that we understand and
control risk in everything we do. We adopt a prudent approach, underpinned by advanced risk management techniques to help us deliver robust financial
performance, withstand stresses, and build sustainable value for our stakeholders. We aim to keep a predictable medium-low risk profile, consistent with our
business model. This is key to achieving our strategic objectives.
RISK FRAMEWORK
How we define risk
Risk types
Our risk types help us define the risks to which we are exposed and support consistent governance and oversight. For definitions of our risk types, see ‘How we
define risk’ in the 2025 Annual Report.
Top and emerging risks
Several of our risk types also have top and/or emerging risks associated with them. For more, see 'Top and emerging risks' in the 2025 Annual Report.
30 June 2026 compared to 31 December 2025
In H1-26, our risk types remained as described in the 2025 Annual Report. There were no changes to our risk types as a result of the acquisition of TSB. During
the transition period, prior to the planned integration and transfer under Part VII of the Financial Services and Markets Act 2000 in the first half of 2027, and to
fulfil fiduciary and SMF responsibilities, TSB will maintain its risk governance processes, but will also be included as part of Santander UK risk governance, as
applicable.
Following the acquisition of TSB, we consider the implications of incorporating TSB's Board Risk Appetite (BRA) and Risk Profile into the rest of Santander UK as
part of our regular reporting to Executive Risk Control Committee (ERCC), Board Risk Committee (BRC) and Board. We do this by presenting a high-level
combined perspective of the separately assessed positions of TSB and the rest of Santander UK, with no material overall impact assessed in H1-26. This view
will evolve as we progress towards Part VII completion, enabling increasing insight across the consolidated group, ultimately through a single, fully integrated
Enterprise-Wide Risk Management Report (EWRM), as we continue to progress towards full Risk Framework alignment and metric consolidation.
Our Top and Emerging risks profile
Our view of Top and Emerging risks slightly worsened in H1-26, driven by significant headwinds from geopolitical, macro-economic, technological, regulatory and
competitive developments all materialising at an accelerated pace. We also refreshed and streamlined our assessment of Top and Emerging risks in H1-26,
focusing on a smaller group of 9 broader, interconnected Top risks (reduced from 14), and 7 Emerging risks (reduced from 9).
Our refreshed assessment, independent of the TSB acquisition, reflects an environment where the risks we face are increasingly systemic, interrelated and less
independent, with the focus on structural complexity rather than isolated risks or events. It is also challenging to be categorical around timeframes for the
crystallisation of Emerging risks, with the emphasis on highlighting our perspective on the overall Emerging risk profile rather than attempting a 'prediction'. We
have mitigating actions in place for all our Top and Emerging risks, with a focus on aligning mitigations to an actionable approach that enables Santander UK to
practically deal with any impacts that a set of highly complex, interconnected and quickly evolving risks might affect, rather than being positioned as specific
solutions.
Top risks
The main changes in Top risks were: Operational Resilience threats are now included in Successful Cyber-Attack, considering the increasing risk landscape due
to developments in Frontier AI; Execution of AI Adoption and Execution of TSB integration are now included in Execution Risks associated with Strategic
Transformation, given the enabling / accelerator aspects of AI for achieving strategic goals, and to recognise the importance of the successful integration of TSB
in delivering Santander UK's business plans; and Mitigating Margin Compression risks, and Execution of Payments Systems Transformation, which will both be
considered as part of Intensifying Competition / Innovation risk (Emerging risk), where our ability to keep pace with market developments will be key to retaining
and expanding our customer base.
Our refreshed Top risks, are as follows:
–Successful Cyber-Attack
–Financial Crime Sanctions Breach
–Volatile Global Geopolitical & Macroeconomic Environment
–Risks associated with Execution of Strategic Transformation
–Failure to Capture Commercial & Strategic Opportunities from Regulatory Change
–Model Risk and the impact on capital requirements
–Sophisticated Social Engineering Fraud
–Failure to maintain Data Quality and
–Risks associated with Technology Infrastructure.
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Emerging risks
In H1-26, consistent with our streamlined approach to Top Risks we combined 3 Emerging Risks within other Emerging Risks and added Private Credit/ Non-
Bank Financial Institution (NBFI) Contagion as a new risk.
The main changes in Emerging Risks were;
Inconsistent Implementation of Global Regulation is included in the Top risk Failure to Capture Commercial and Strategic Opportunities from Regulatory Change,
which was reframed to assess the potential for strategic-opportunity cost risk; UK Political / Social Dislocation is now included in UK Macro & Government Policy
with UK political risks remaining elevated and intrinsically linked to UK Government policies; Developments in Quantum Technology has been combined with
Digital Currencies, Tokenisation and Crypto assets as Emerging Technologies risks assessed as longer-term risks likely to crystallise beyond the plan period but
needing planning and investment nearer term; and Private Credit / NBFI contagion risk has been added as a new Emerging risk, with regulatory bodies
increasingly highlighting risks to Financial Stability.
Our refreshed Emerging risks, are as follows:
Domestic Macro & Government Policy;
–Intensifying Competition / Innovation risk;
–Loss of Critical National / Financial Market Infrastructure;
–Credit Impacts from AI Deployment;
–Emerging Technologies risks;
–Climate Change; and
–Private Credit / NBFI contagion.
Santander UK plc10
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Credit risk
Overview Credit risk is the risk of financial loss due to the default or credit quality deterioration of a customer or counterparty to which we provided credit, or for whom we assumed a financial obligation. Credit risk management In H1-26, there were no significant changes in the way we manage credit risk as described in the 2025 Annual Report, including as a result of the TSB acquisition, except as set out below for Business banking and SICR. Credit risk review In this section, we analyse our key credit risk metrics. | Key metrics Stage 3 ratio of 0.86% (2025: 1.18%). Loss allowances of £889m (2025: £812m). Balance weighted average LTV of 66% (2025: 65%) on new mortgage lending. |
OUR KEY CREDIT RISKS
Exposures
There were no significant changes to the business segments in which our exposures to credit risk arise as set out in the 2025 Annual Report, except that,
following its acquisition, TSB is now managed as part of our Retail and Business Banking segment.
CREDIT RISK MANAGEMENT
Our approach to credit risk
There were no significant changes to our approach to credit risk as set out in the 2025 Annual Report, except that TSB's Business banking provides secured
lending, whereas the rest of Santander UK's Business banking provides unsecured lending. We manage the credit quality of TSB's secured Business banking in
a similar way as for other secured lending in Retail & Business Banking, as set out in the 2025 Annual Report.
Recognising ECL
The ECL approach estimates the credit losses arising from defaults in the next 12 months on qualifying exposures, or defaults over the lifetime of the exposure
where there is evidence of a SICR since the origination date. The ECL approach takes into account forward-looking data, including a range of possible outcomes,
which should be unbiased and probability-weighted to reflect the risk of a loss being incurred even when it is unlikely.
Following its acquisition, TSB currently retains its own models but is now using consistent economic scenarios and weights with the rest of the Santander UK
group. The impact of applying these was not material to our overall cost of risk.
Multiple economic scenarios and probability weights
For all our portfolios, including those acquired as part of TSB, we use four forward-looking economic scenarios. At 30 June 2026, they consisted of a central base
case, one upside scenario and two downside scenarios. We use these scenarios to reflect a wide range of possible outcomes for the UK economy.
Our forecasting approach
In H1-26, there were no significant changes in our forecasting approach as described in the 2025 Annual Report but we have reviewed our medium-term
assumptions for the key macroeconomic variables.
Base case
We review the scenarios and associated weights every quarter to ensure they appropriately reflect the current economic circumstances, and UK Government
policy which is subject to change in this fluid environment.
In summary, the outlook for the UK economy in 2026 is based on an underlying assumption that the resolution to the conflict in Iran is pushed into the second half
of the year. The impact of this sees GDP growth slow as household spending weakens and the unemployment rate rises. Inflation is set to peak at close to 4%
and would be consistent with the Bank of England raising Bank Rate to 4% to help counter second-round effects from elevated inflation expectations. There is
increased uncertainty over the economic outlook with the possibility for escalating geopolitical tensions and growing domestic political uncertainty to dampen the
UK's economic performance. Productivity growth is expected to remain weak and will limit our medium term prospects.
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Base case key macroeconomic assumptions |
–House price growth: House price data presents a mixed picture but in general price growth has been modest as higher-than-expected mortgage rates have weighed on activity, evidenced by the latest decline in mortgage approvals across the market. Survey data shows buyer demand has weakened and although mortgage rates have come down, affordability constraints are set to weigh on property prices going forward. We forecast house price growth of below 1% in 2026 as demand slows. Bank Rate cuts resuming in 2027 H2 should allow a gradual improvement in property price growth to c.3%, broadly in line with average household disposable income. |
–GDP: The UK economy posted strong growth in Q1-26, expanding by 0.6% q/q. The breakdown suggests some front-loading of activity ahead of higher energy prices, particularly in the production sector, but there was a welcome rise in consumer spending and business investment. However, moving forward this strength is unlikely to continue as the economy starts to feel the full effects of higher energy prices and the spillover of this into other goods and services. Household spending is expected to remain weak as real household disposable income falls and consumer confidence remains subdued. We expect below trend growth of around 1% in 2026 and 2027, before recovering to average growth rates in 2028. |
–Unemployment rate: The labour market has gradually loosened with the unemployment rate of 4.9% in the three months to April 2026 higher than a year earlier, although it is down from 5.2% at the end of 2025. The number of payrolled employees has declined in most months since higher employment costs were announced in the October 2024 budget. With companies under pressure from rising costs, including from higher employment taxes, it is likely that some will become insolvent and although we do not envisage a large rise in unemployment, we do still expect the jobless rate to peak at 5.5% in early 2027 before falling gradually. |
–Bank Rate: The Monetary Policy Committee (MPC) maintained Bank Rate at 3.75% at the July 2026 MPC meeting as uncertainty around disruptions in energy prices and supply chains continue to keep policymakers cautious. Despite softer economic data meaning the likelihood of material second-round effects is lower, the MPC remains vigilant to inflation risks and stands ready to act. Based on the assumptions outlined above, our base case assumes the MPC raises Bank Rate to 4% in Q3-26 to help counter any second-round effects and keep financial conditions sufficiently tight. We then expect the MPC to resume interest rate cuts in the second half of 2027 until Bank Rate reaches a terminal rate of 3.25% at the start of 2028. |
–CRE price growth: Commercial property prices have been rising only modestly over the past year with annual growth averaging a little over 1% during this time. A higher interest rate profile than previously expected, which does not anticipate rate cuts until the second half of 2027, alongside lower business confidence pushes down our forecast for commercial property price growth which averages around 1.5% over the forecast period. |
In the medium-term, the projections assume that current demographic and productivity trends will continue, limiting scope for an improvement in the UK’s growth
potential. For instance, it is likely that the reduction in the UK workforce continues and that this will have a knock-on impact for the economy, particularly if there
are shortages of skilled workers in particular sectors. This is reflected in an average annual growth expectation of 1.2% over the forecast period, below the OBR’s
latest estimate of the UK’s long run average growth rate. CPI inflation is forecast to remain marginally above the 2% target rate for most of the initial five-year
forecast period.
Key changes to our base case in H1-26
Base case has been updated to reflect stronger growth in Q1-26 although this strength is likely to fade. Inflation is expected to remain above target for the rest of
2026 due to the impact of higher energy prices and results in one Bank Rate hike in Q3-26. We anticipate a rise in unemployment as firms adjust to rising costs,
driven by global and domestic factors.
The key changes to our base case assumptions in H1-26 were: (i) the 2026 GDP growth forecast was revised up due to strong growth in Q1 but growth remains
below potential which carries on into 2027. (ii) higher household energy bills in the second half of 2026 keeps headline CPI above 3% for most of the year, and
above the 2% target until the second half of 2027. This would prompt the Bank of England to increase Bank Rate to 4% in Q3-26; and (iii) the unemployment rate
grinds higher, reflecting current labour market weakness although a lower starting position means marginally lower peak.
Other scenarios
Based on the revised base case, we reviewed our suite of scenarios to ensure that they capture the wide range of potential outcomes for the UK economy.
These include (i) reflecting increased geopolitical risk resulting in above target inflation, leading to interest rates being higher for longer; (ii) a slower recovery that
is more akin to the ‘U’ shape of past recessions; (iii) labour market frictions due to skills mismatches and a shrinking workforce as longer term sickness levels
remain above pre-pandemic levels); and (iv) the global economy recovering more swiftly from higher inflation.
We continue to use the base case and three additional scenarios, which we consider provides a range wide enough to reflect all the above potential outcomes.
With risks still skewed to the downside we concluded that only one upside scenario was needed to reflect the upside risks to the base case.
The other scenarios are:
One upside scenario
This scenario has a quicker recovery in growth than the base case and is a bull case to the base forecasts with the supply side of the economic improving which
allows for stronger growth with lower inflation. This allows the Bank of England to cut rates faster than the base case, bringing them back towards what might be
considered the neutral rate earlier. This results in higher consumer and business confidence, supporting greater levels of spending and investment. Savings rates
return to levels consistent with economic growth as real earnings growth returns. GDP growth is stronger compared to the base case, house price growth
remains robust, the unemployment rate peaks at a lower level and inflation falls back to target sooner.
Two downside scenarios
Downside 1 - This scenario is a bear case to the base case. In this scenario conflict in the Middle East continues through to the end of the year. Energy prices
remain elevated with further disruption to the supply of other commodities. The economy experiences a mild recession in 2026 and 2027 with a recovery seen
from 2028 onwards as growth plays catch up as energy prices fall and supply stress unwinds. The recession causes the unemployment rate to rise as business
insolvencies rise while declines in consumer confidence mean households opt to save more rather than spend, weighing on consumption. Stronger second-
round effects mean a higher peak in inflation compared to the base case and monetary policy is tightened in response, causing house prices to decline.
Productivity through the use of AI helps to spur growth in the outer years of the scenario.
Downside 2 - This scenario is similar in severity to a typical stress test scenario. It shows a marked fall in GDP, with unemployment rising to levels consistent
with the Global Financial Crisis and house prices falling sharply. It also reflects an escalation in geopolitical tensions which affects market sentiment and causes
further fragmentation of the global economy. It also assumes that major risk events continue to occur, exposing countries’ fiscal vulnerabilities and their ability to
respond to such events. Global growth is further undermined by weakness in the Far East and in the US economy, as tariffs are imposed across countries with a
significant and widespread recession restricting the governments ability to support the economy. Business investment contracts and insolvencies rise, and
although there are some inflationary pressures, the sharp fall in demand means inflation falls below target and the MPC cuts rates sharply to stabilise the
economy.
Key changes to our scenarios in H1-26
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.
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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.
The table below sets out our macroeconomic assumptions and their evolution throughout the forecast period for each of the scenarios at 30 June 2026:
Economic scenarios1 | Upside | Base case | Downside 1 | Downside 2 | Weighted | |
% | % | % | % | % | ||
GDP | 2025 (actual) | 1.4 | 1.4 | 1.4 | 1.4 | 1.4 |
(Calendar year annual growth rate) | 2026 | 1.2 | 0.9 | 0.4 | (1.2) | 0.6 |
2027 | 1.7 | 0.9 | (0.3) | (2.9) | 0.3 | |
2028 | 2.6 | 1.4 | 1.7 | 1.4 | 1.7 | |
2029 | 2.5 | 1.4 | 2.1 | 1.5 | 1.8 | |
2030 | 2.8 | 1.5 | 1.7 | 1.5 | 1.7 | |
2031 | 2.6 | 1.5 | 1.6 | 1.4 | 1.7 | |
Start to trough2 | n/a | n/a | (1.0) | (5.0) | (0.6) | |
5-year average increase/decrease3 | 2.2 | 1.2 | 1.1 | — | n/a | |
Bank Rate | 2025 (actual) | 3.75 | 3.75 | 3.75 | 3.75 | 3.75 |
(at 31-Dec for each period) | 2026 | 3.50 | 4.00 | 4.50 | 3.25 | 4.00 |
2027 | 3.25 | 3.50 | 4.75 | 2.00 | 3.69 | |
2028 | 3.25 | 3.25 | 3.50 | 2.25 | 3.23 | |
2029 | 3.25 | 3.25 | 3.50 | 2.75 | 3.28 | |
2030 | 3.25 | 3.25 | 3.50 | 3.00 | 3.30 | |
2031 | 3.25 | 3.25 | 3.25 | 3.25 | 3.25 | |
5-year end period | 3.25 | 3.25 | 3.50 | 3.00 | n/a | |
5-year peak | 3.75 | 4.00 | 4.75 | 3.75 | 4.00 | |
HPI | 2025 (actual) | 1.0 | 1.0 | 1.0 | 1.0 | 1.0 |
(Q4 annual growth rate) | 2026 | 1.3 | 0.8 | (1.1) | (11.0) | (0.9) |
2027 | 3.7 | 1.5 | (6.7) | (13.0) | (1.9) | |
2028 | 5.0 | 2.5 | (1.4) | 1.7 | 1.7 | |
2029 | 5.0 | 3.0 | 3.4 | 7.9 | 3.8 | |
2030 | 5.0 | 3.0 | 4.4 | 5.6 | 3.9 | |
2031 | 4.5 | 3.0 | 3.9 | 5.3 | 3.7 | |
Start to trough2 | n/a | n/a | (9.8) | (27.2) | (3.3) | |
5-year average increase/decrease3 | 4.2 | 2.2 | (0.3) | (2.0) | n/a | |
Unemployment | 2025 (actual) | 5.2 | 5.2 | 5.2 | 5.2 | 5.2 |
(at 31-Dec for each period) | 2026 | 5.3 | 5.4 | 5.8 | 7.2 | 5.7 |
2027 | 4.9 | 5.4 | 6.0 | 8.3 | 5.8 | |
2028 | 4.1 | 5.2 | 5.3 | 7.5 | 5.3 | |
2029 | 4.0 | 4.9 | 4.9 | 6.7 | 4.9 | |
2030 | 4.0 | 4.6 | 4.7 | 5.2 | 4.6 | |
2031 | 4.0 | 4.4 | 4.5 | 4.7 | 4.4 | |
5-year end period | 4.0 | 4.5 | 4.6 | 4.9 | n/a | |
5-year peak | 5.3 | 5.5 | 6.1 | 8.5 | 5.9 | |
CRE price growth | 2025 (actual) | 1.1 | 1.1 | 1.1 | 1.1 | 1.1 |
(Q4 annual growth rate) | 2026 | 3.6 | 0.6 | (4.3) | (13.1) | (1.8) |
2027 | 4.1 | 1.3 | (3.6) | (8.0) | (0.5) | |
2028 | 4.1 | 2.1 | (0.4) | (2.9) | 1.3 | |
2029 | 4.0 | 1.8 | 2.8 | 2.2 | 2.5 | |
2030 | 3.9 | 1.5 | 1.7 | 2.4 | 2.1 | |
2031 | 3.1 | 1.5 | 1.6 | 2.0 | 1.8 | |
Start to trough2 | n/a | n/a | (8.3) | (22.4) | (2.4) | |
5-year average increase/decrease3 | 4.1 | 1.5 | (0.7) | (4.0) | n/a |
1 Our Q2-26 forecast used for ECL calculation. GDP is the calendar year annual growth rate. HPI and CRE price growth is the Q4 annual growth rate and all other data points are at 31 December in the year
indicated.
2GDP, HPI and CRE start is taken from the level at Q1-26.
3This is the compound growth rate (CAGR) based on a 5-year period which represents an average annualised growth rate.
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The table below sets out our macroeconomic assumptions and their evolution for each of the scenarios at 31 December 2025:
Upside | Base case | Downside 1 | Downside 2 | Weighted | ||
% | % | % | % | % | ||
GDP | 2024 (actual) | 1.1 | 1.1 | 1.1 | 1.1 | 1.1 |
(Calendar year annual growth rate) | 2025 | 1.5 | 1.4 | 1.3 | 1.3 | 1.4 |
2026 | 1.7 | 1.0 | (0.4) | (3.3) | 0.3 | |
2027 | 2.3 | 1.4 | — | (1.0) | 0.9 | |
2028 | 2.5 | 1.4 | 0.4 | 1.4 | 1.3 | |
2029 | 2.6 | 1.5 | 0.4 | 1.4 | 1.4 | |
2030 | 2.7 | 1.5 | 0.7 | 1.4 | 1.5 | |
Start to trough2 | n/a | n/a | (0.7) | (5.0) | n/a | |
5-year average increase/decrease3 | 2.3 | 1.4 | 0.2 | (0.1) | n/a | |
Bank Rate | 2024 (actual) | 4.75 | 4.75 | 4.75 | 4.75 | 4.75 |
(at 31-Dec for each period) | 2025 | 3.75 | 3.75 | 3.75 | 3.75 | 3.75 |
2026 | 3.00 | 3.25 | 4.50 | 2.00 | 3.40 | |
2027 | 3.00 | 3.25 | 3.25 | 1.50 | 3.04 | |
2028 | 3.00 | 3.25 | 3.25 | 2.50 | 3.14 | |
2029 | 3.00 | 3.25 | 3.25 | 2.75 | 3.16 | |
2030 | 3.00 | 3.25 | 3.25 | 3.00 | 3.19 | |
5-year end period | 3.00 | 3.25 | 3.25 | 3.00 | n/a | |
5-year peak | 3.75 | 3.75 | 4.50 | 3.75 | 3.79 | |
HPI | 2024 (actual) | 4.0 | 4.0 | 4.0 | 4.0 | 4.0 |
(Q4 annual growth rate) | 2025 | 2.3 | 1.5 | 0.1 | 0.3 | 1.2 |
2026 | 4.1 | 2.5 | (5.3) | (12.1) | (0.6) | |
2027 | 4.5 | 3.0 | (4.4) | (11.9) | 0.2 | |
2028 | 4.5 | 3.0 | 0.7 | (4.9) | 2.1 | |
2029 | 4.5 | 3.0 | 3.4 | 7.2 | 3.7 | |
2030 | 4.5 | 3.0 | 4.4 | 7.1 | 3.9 | |
Start to trough2 | n/a | n/a | (10.2) | (28.0) | (0.3) | |
5-year average increase/decrease3 | 4.4 | 2.9 | (0.7) | (3.7) | n/a | |
Unemployment | 2024 (actual) | 4.4 | 4.4 | 4.4 | 4.4 | 4.4 |
(at 31-Dec for each period) | 2025 | 4.7 | 4.8 | 5.1 | 5.2 | 4.9 |
2026 | 4.7 | 4.9 | 5.7 | 6.8 | 5.3 | |
2027 | 4.1 | 4.7 | 5.8 | 8.5 | 5.3 | |
2028 | 4.0 | 4.4 | 5.8 | 7.9 | 5.0 | |
2029 | 4.0 | 4.3 | 5.9 | 7.1 | 4.9 | |
2030 | 4.0 | 4.3 | 6.0 | 6.4 | 4.9 | |
5-year end period | 4.0 | 4.3 | 6.0 | 6.4 | n/a | |
5-year peak | 4.7 | 4.9 | 6.0 | 8.5 | 5.3 | |
CRE price growth | 2024 (actual) | 0.5 | 0.5 | 0.5 | 0.5 | 0.5 |
(Q4 annual growth rate) | 2025 | 2.1 | 1.7 | (0.2) | (0.8) | 1.0 |
2026 | 6.7 | 2.2 | (3.1) | (16.8) | (0.3) | |
2027 | 5.8 | 2.5 | (1.9) | (7.2) | 1.2 | |
2028 | 3.6 | 2.2 | (0.8) | 2.5 | 1.8 | |
2029 | 4.0 | 1.9 | 0.3 | 3.0 | 2.0 | |
2030 | 2.3 | 1.5 | 2.4 | 3.9 | 2.1 | |
Start to trough2 | n/a | n/a | (6.7) | (24.1) | (0.1) | |
5-year average increase/decrease3 | 4.6 | 2.2 | (0.9) | (3.8) | n/a |
1Our Q4-25 forecast used for ECL calculation. GDP is the calendar year annual growth rate, HPI and CRE price growth rate is Q4 annual growth rate and all other data points are at 31 December in the year
indicated.
2GDP, HPI and CRE start is taken from level at Q3-25.
3This is the compound annual growth rate (CAGR) based on a 5-year period which represents an average annualised growth rate.
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Scenario weights
Each quarter, we undertake a full review of the scenario weights we apply. We consider the weighting of the economic scenarios as a whole, while ensuring that
the scenarios capture the non-linear distribution of losses across a reasonable range. To support our initial assessment of the weighting of a scenario, we
undertake a Monte Carlo analysis to find out the likelihood of a five-year average GDP forecast growth rate occurring based on the long run historically observed
average. Creating a standard distribution bell curve around this long run average provides an estimate of the probability of a given GDP scenario occurring based
on past experience and therefore assign a provisional weight to that scenario.
The scenario weights we applied for 30 June 2026 and 31 December 2025 were:
Upside | Base case | Downside 1 | Downside 2 | Weighted | |
Scenario weights | % | % | % | % | % |
30 June 2026 | 15 | 45 | 30 | 10 | 100 |
31 December 2025 | 15 | 50 | 25 | 10 | 100 |
30 June 2026 compared to 31 December 2025
In H1-26, there were no significant changes to our methodology as described in the Annual Report 2025.
There were no changes to weights in 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%.
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Significant Increase in Credit Risk (SICR)
As set out in the 2025 Annual Report, loans which have suffered a SICR since origination are subject to a lifetime ECL assessment which extends to a maximum
of the contractual term of the loan, or the behavioural term for a revolving facility. Loans which have not experienced a SICR are subject to 12-month ECL. We
assess the credit risk profile of each facility to determine which of three stages to allocate them to: Stage 1, Stage 2 or Stage 3.
We use quantitative, qualitative and backstop criteria to identify exposures that suffer a SICR.
Key changes in H1-26
In H1-26, the only changes to our SICR criteria arose as a result of the acquisition of TSB, which uses simplified SICR criteria for its portfolios, although the
impact of the differences in SICR criteria was not significant in H1-26. We intend to start work on aligning TSB's SICR criteria with the rest of Santander UK in
H2-26. The main differences in TSB's SICR criteria are as follows:
–Quantitative criteria: Both TSB and the rest of Santander UK use quantitative measures to identify SICR, mainly through deterioration in probability of default
(PD) metrics over the expected life of the exposure. While the underlying principle is consistent across both organisations, the specific thresholds, calibration
approaches and product-level application differ by portfolio.
–Qualitative criteria: Both TSB and the rest of Santander UK incorporate qualitative indicators of SICR alongside quantitative measures. These include
indicators related to forbearance, arrears, default-related events and account monitoring. The overall framework is aligned in intent, although the rest of
Santander UK applies a wider range of qualitative triggers across its portfolios, whereas TSB places greater reliance on PD deterioration measures.
–Backstop criteria: Both TSB and the rest of Santander UK apply backstop measures to ensure exposures demonstrating clear signs of credit deterioration are
transferred to Stage 2 irrespective of quantitative assessments. The main backstop indicators are broadly aligned, with 30 days past due (30DPD) remaining a
key trigger across both frameworks.
Purchased or Originated Credit-Impaired (POCI) assets are financial assets that are credit-impaired at the date of acquisition or origination. Under IFRS 9, these
assets are assessed using a credit-adjusted effective interest rate, and changes in lifetime expected credit losses are recognised through subsequent
movements in credit risk rather than through the recognition of day-one impairment allowances.
Judgemental Adjustments (JAs)
Retail & Business Banking | |||||||
Everyday Banking | |||||||
Mortgages | Credit Cards | Other | Consumer Finance | Corporate & Commercial Banking | Corporate Centre | Total | |
30 June 2026 | £m | £m | £m | £m | £m | £m | £m |
Modelled ECL | 105 | 187 | 153 | 79 | 117 | — | 641 |
Individually assessed | 7 | — | — | — | 185 | — | 192 |
ECL before Judgemental Adjustments | 112 | 187 | 153 | 79 | 302 | — | 833 |
Judgemental Adjustments | |||||||
Affordability and Cost of Living | 4 | — | 5 | — | 4 | — | 13 |
Adjustments to modelled forecast parameters | 19 | (7) | 13 | (12) | 2 | — | 15 |
Corporate single large exposure | — | — | — | — | 27 | — | 27 |
Other | 1 | — | — | — | — | — | 1 |
Total Judgemental Adjustments | 24 | (7) | 18 | (12) | 33 | — | 56 |
Total ECL | 136 | 180 | 171 | 67 | 335 | — | 889 |
Total JAs as a percentage of Total ECL (%) | 6 | ||||||
31 December 2025 | £m | £m | £m | £m | £m | £m | £m |
Modelled ECL | 104 | 160 | 115 | 74 | 110 | — | 563 |
Individually assessed | 8 | — | — | — | 180 | — | 188 |
ECL before Judgemental Adjustments | 112 | 160 | 115 | 74 | 290 | — | 751 |
Judgemental Adjustments | |||||||
Affordability and Cost of Living | 2 | — | 6 | — | 1 | — | 9 |
Adjustments to modelled forecast parameters | 23 | (5) | 13 | (11) | 5 | — | 25 |
Corporate single large exposure | — | — | — | — | 27 | — | 27 |
Other | — | — | — | — | — | — | — |
Total Judgemental Adjustments | 25 | (5) | 19 | (11) | 33 | — | 61 |
Total ECL | 137 | 155 | 134 | 63 | 323 | — | 812 |
Total JAs as a percentage of Total ECL (%) | 8 |
30 June 2026 compared to 31 December 2025
In H1-26, JAs reduced from £61m to £56m mainly due to the sale of high RWA mortgages in Q2-26, partly offset by an increase in the Corporate Supply Chain
JA due to risks arising from the conflict in the Middle East, and the inclusion of TSB JAs of £4m. JAs as a proportion of total ECL decreased from 8% to 6%.
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The ECL allowance is sensitive to the methods, assumptions and estimates underlying its calculation. For example, management could have applied different
probability weights to the economic scenarios. In addition, the ECL for residential mortgages is significantly affected by the HPI assumptions which determine the
valuation of collateral used in the calculations.
Had management used different assumptions on probability weights and HPI, a larger or smaller ECL charge would have resulted that could have had a material
impact on the ECL allowance and profit before tax. We incorporated JAs into the sensitivity analysis, and these assumptions are set out below.
The tables below show the ECL allowances that would have arisen had management applied a 100% weight to each economic scenario. The allowances were
calculated using a stage allocation appropriate to each scenario and differs from the probability-weighted stage allocation used to determine the ECL allowance
shown above. For exposures subject to individual assessment, the distribution of ECL which could reasonably be expected has also been considered, assuming
no change in the number of cases subject to individual assessment, and within the context of a potential best to worst case outcome.
Upside | Base case | Downside 1 | Downside 2 | Weighted | |
30 June 2026 | £m | £m | £m | £m | £m |
Exposure | |||||
Retail & Business Banking | |||||
Of which: | |||||
– Mortgages | |||||
Consumer Finance | |||||
Corporate & Commercial Banking | |||||
Corporate Centre | |||||
ECL | |||||
Retail & Business Banking | |||||
Of which: | |||||
– Mortgages | |||||
Consumer Finance | |||||
Corporate & Commercial Banking | |||||
Corporate Centre | |||||
31 December 2025 | £m | £m | £m | £m | £m |
Exposure | |||||
Retail & Business Banking | |||||
Of which: | |||||
– Mortgages | |||||
Consumer Finance | |||||
Corporate & Commercial Banking | |||||
Corporate Centre | |||||
ECL | |||||
Retail & Business Banking | |||||
Of which: | |||||
– Mortgages | |||||
Consumer Finance | |||||
Corporate & Commercial Banking | |||||
Corporate Centre | |||||
30 June 2026 compared to 31 December 2025
ECL increased by £78m since 31 December 2025 mainly driven by the acquisition of TSB driving £73m and economic updates following the conflict in the Middle
East £22m, partly offset by the release of ECL due the sale of high RWA mortgages in Q2-26.
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SANTANDER UK GROUP LEVEL – CREDIT RISK REVIEW
The credit risk balances in these credit risk review sections include interest we have charged to the customer's account, but not accrued interest that we have not
charged to the account yet, unless otherwise stated.
Rating distribution
The Santander UK risk grade consists of eight grades for non-defaulted exposures from 9 (lowest risk) to 2 (highest risk). For details, including the approximate
equivalent credit rating grade, see 'Single credit rating scale' in 'Santander UK group level - credit risk review' in the Risk review in the 2025 Annual Report.
Santander UK risk grade | Loss allowance | Total | ||||||||
9 | 8 | 7 | 6 | 5 | 4 | 3 to 1 | Other1,2 | |||
30 June 2026 | £bn | £bn | £bn | £bn | £bn | £bn | £bn | £bn | £bn | £bn |
Exposures - On balance sheet | ||||||||||
Financial assets at amortised cost: | ||||||||||
–Loans and advances to customers2 | 10.6 | 31.6 | 84.9 | 71.7 | 23.0 | 7.0 | 5.4 | 7.0 | (0.8) | 240.4 |
–Stage 1 | 10.4 | 31.1 | 81.5 | 66.0 | 19.8 | 3.9 | 1.2 | 6.6 | (0.2) | 220.3 |
–Stage 2 | 0.2 | 0.5 | 3.4 | 5.7 | 3.2 | 3.1 | 2.1 | 0.2 | (0.3) | 18.1 |
–Stage 3 | — | — | — | — | — | — | 1.8 | 0.1 | (0.3) | 1.6 |
–POCI | — | — | — | — | — | — | 0.3 | 0.1 | — | 0.4 |
Of which mortgages: | 9.9 | 29.7 | 78.8 | 63.5 | 14.2 | 3.5 | 2.9 | 0.1 | (0.1) | 202.5 |
–Stage 1 | 9.8 | 29.2 | 75.5 | 57.8 | 11.5 | 1.2 | 0.3 | — | — | 185.3 |
–Stage 2 | 0.1 | 0.5 | 3.3 | 5.7 | 2.7 | 2.3 | 1.1 | — | (0.1) | 15.6 |
–Stage 3 | — | — | — | — | — | — | 1.2 | — | — | 1.2 |
–POCI | — | — | — | — | — | — | 0.3 | 0.1 | — | 0.4 |
Santander UK risk grade | Total | Coverage Ratio | ||||||||
9 | 8 | 7 | 6 | 5 | 4 | 3 to 1 | Other1,2 | |||
30 June 2026 | £bn | £bn | £bn | £bn | £bn | £bn | £bn | £bn | £bn | % |
ECL - On balance sheet | ||||||||||
Financial assets at amortised cost: | ||||||||||
–Loans and advances to customers2 | — | — | — | 0.1 | 0.1 | 0.1 | 0.5 | — | 0.8 | 0.3 |
–Stage 1 | — | — | — | 0.1 | 0.1 | — | — | — | 0.2 | 0.1 |
–Stage 2 | — | — | — | — | — | 0.1 | 0.2 | — | 0.3 | 1.6 |
–Stage 3 | — | — | — | — | — | — | 0.3 | — | 0.3 | 15.8 |
Of which mortgages: | — | — | — | — | — | — | 0.1 | — | 0.1 | — |
–Stage 1 | — | — | — | — | — | — | — | — | — | — |
–Stage 2 | — | — | — | — | — | — | 0.1 | — | 0.1 | 0.6 |
–Stage 3 | — | — | — | — | — | — | — | — | — | — |
Santander UK risk grade | Loss allowance | |||||||||
9 | 8 | 7 | 6 | 5 | 4 | 3 to 1 | Other1,2 | Total | ||
31 December 2025 | £bn | £bn | £bn | £bn | £bn | £bn | £bn | £bn | £bn | £bn |
Exposures - On balance sheet | ||||||||||
Financial assets at amortised cost: | ||||||||||
–Loans and advances to customers2 | 11.2 | 31.6 | 80.9 | 46.1 | 15.4 | 6.2 | 5.0 | 6.9 | (0.7) | 202.6 |
–Stage 1 | 11.0 | 31.0 | 77.9 | 41.0 | 12.4 | 2.9 | 0.7 | 6.8 | (0.1) | 183.6 |
–Stage 2 | 0.2 | 0.6 | 3.0 | 5.1 | 3.0 | 3.3 | 2.1 | 0.1 | (0.3) | 17.1 |
–Stage 3 | — | — | — | — | — | — | 2.2 | — | (0.3) | 1.9 |
Of which mortgages: | 10.6 | 29.7 | 75.5 | 39.3 | 6.7 | 3.0 | 2.4 | 0.1 | (0.1) | 167.2 |
–Stage 1 | 10.4 | 29.1 | 72.4 | 34.3 | 4.3 | 0.4 | 0.1 | — | — | 151.0 |
–Stage 2 | 0.2 | 0.5 | 3.1 | 5.0 | 2.4 | 2.6 | 1.0 | — | — | 14.8 |
–Stage 3 | — | 0.1 | — | — | — | — | 1.3 | 0.1 | (0.1) | 1.4 |
Santander UK risk grade | Total | Coverage Ratio | ||||||||
9 | 8 | 7 | 6 | 5 | 4 | 3 to 1 | Other1,2 | |||
31 December 2025 | £bn | £bn | £bn | £bn | £bn | £bn | £bn | £bn | £bn | % |
ECL - On balance sheet | ||||||||||
Financial assets at amortised cost: | ||||||||||
–Loans and advances to customers2 | — | — | — | — | 0.2 | 0.1 | 0.4 | — | 0.7 | 0.3 |
–Stage 1 | — | — | — | — | 0.1 | — | — | — | 0.1 | 0.1 |
–Stage 2 | — | — | — | — | 0.1 | 0.1 | 0.1 | — | 0.3 | 1.7 |
–Stage 3 | — | — | — | — | — | — | 0.3 | — | 0.3 | 13.6 |
Of which mortgages: | — | — | — | — | — | — | 0.1 | — | 0.1 | 0.1 |
–Stage 1 | — | — | — | — | — | — | — | — | — | — |
–Stage 2 | — | — | — | — | — | — | — | — | — | — |
–Stage 3 | — | — | — | — | — | — | 0.1 | — | 0.1 | 6.7 |
1Includes Joint Ventures and Business Banking (including BBLs balances). We use scorecards for these items, rather than rating models.
2Includes interest we have charged to the customer’s account and accrued interest we have not charged to the account yet.
Santander UK plc18
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Credit performance
Customer Loans | 6 month Gross write-offs | Loan Loss Allowance s | ||||||
Total | Stage 1 | Stage 2 | Stage 31 | POCI | ||||
30 June 2026 | £bn | £bn | £bn | £bn | % | £bn | £m | £m |
Retail & Business Banking | 210.8 | 192.4 | 16.7 | 1.3 | 0.65 | 0.4 | 93 | 440 |
– Mortgages | 202.6 | 185.2 | 15.8 | 1.2 | 0.59 | 0.4 | 10 | 135 |
– Credit Cards | 3.7 | 3.2 | 0.4 | 0.1 | 2.67 | — | 33 | 161 |
– Unsecured Personal Loans | 3.2 | 3.0 | 0.2 | — | 0.83 | — | 32 | 89 |
– Overdrafts | 0.5 | 0.3 | 0.2 | — | 5.67 | — | 15 | 39 |
– Business Banking | 0.8 | 0.7 | 0.1 | — | 4.06 | — | 3 | 16 |
Consumer Finance | 5.0 | 4.6 | 0.4 | — | 0.97 | — | 15 | 67 |
Corporate & Commercial Banking | 19.5 | 17.6 | 1.3 | 0.6 | 3.03 | — | 21 | 296 |
Corporate Centre | — | — | — | — | — | — | — | — |
Total Drawn | 235.3 | 214.6 | 18.4 | 1.9 | 0.86 | 0.4 | 129 | 803 |
Retail & Business Banking | 31.9 | 31.1 | 0.8 | — | — | — | 47 | |
– Mortgages | 14.9 | 14.7 | 0.2 | — | — | — | 1 | |
– Credit Cards | 13.1 | 12.8 | 0.3 | — | — | — | 19 | |
– Unsecured Personal Loans | — | — | — | — | — | — | — | |
– Overdrafts | 3.6 | 3.3 | 0.3 | — | — | — | 26 | |
– Business Banking | 0.3 | 0.3 | — | — | — | — | 1 | |
Consumer Finance | — | — | — | — | — | — | — | |
Corporate & Commercial Banking | 9.6 | 9.3 | 0.3 | — | — | — | 39 | |
Corporate Centre | 0.3 | 0.3 | — | — | — | — | — | |
Total Undrawn | 41.8 | 40.7 | 1.1 | — | — | — | 86 | |
Total | 277.1 | 255.3 | 19.5 | 1.9 | 0.4 | 129 | 889 | |
Customer Loans | 12 month Gross write- offs | Loan Loss Allowances | |||||
Total | Stage 1 | Stage 2 | Stage 31 | ||||
31 December 2025 | £bn | £bn | £bn | £bn | % | £m | £m |
Retail & Business Banking | 173.5 | 156.2 | 15.7 | 1.6 | 0.95 | 168 | 384 |
– Mortgages | 167.3 | 151.0 | 14.8 | 1.5 | 0.88 | 15 | 137 |
– Credit Cards | 3.1 | 2.6 | 0.4 | 0.1 | 2.88 | 55 | 137 |
– Unsecured Personal Loans | 2.0 | 1.8 | 0.2 | — | 1.07 | 65 | 57 |
– Overdrafts | 0.4 | 0.2 | 0.2 | — | 6.87 | 24 | 37 |
– Business Banking | 0.7 | 0.6 | 0.1 | — | 5.65 | 9 | 16 |
Consumer Finance | 5.0 | 4.6 | 0.4 | — | 0.96 | 27 | 63 |
Corporate & Commercial Banking | 18.9 | 16.9 | 1.4 | 0.6 | 3.42 | 53 | 282 |
Corporate Centre | — | — | — | — | 0.15 | — | — |
Total Drawn | 197.4 | 177.7 | 17.5 | 2.2 | 1.18 | 248 | 729 |
Retail & Business Banking | 27.8 | 27.0 | 0.8 | — | — | 42 | |
– Mortgages | 13.1 | 12.8 | 0.3 | — | — | — | |
– Credit Cards | 11.6 | 11.3 | 0.3 | — | — | 18 | |
– Unsecured Personal Loans | — | — | — | — | — | — | |
– Overdrafts | 2.9 | 2.7 | 0.2 | — | — | 23 | |
– Business Banking | 0.2 | 0.2 | — | — | — | 1 | |
Consumer Finance | — | — | — | — | — | — | |
Corporate & Commercial Banking | 8.4 | 8.1 | 0.3 | — | — | 41 | |
Corporate Centre | 2.6 | 2.6 | — | — | — | — | |
Total Undrawn | 38.8 | 37.7 | 1.1 | — | — | 83 | |
Total | 236.2 | 215.4 | 18.6 | 2.2 | 248 | 812 | |
1 Stage 3 ratio is the sum of Stage 3 drawn and Stage 3 undrawn assets divided by the sum of total drawn assets and Stage 3 undrawn assets.
Santander UK plc19
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Arrears over 90 days past due
30 June 2026 | 31 December 2025 | ||
% | % | ||
Retail & Business Banking | |||
–Mortgages | 0.54 | 0.65 | |
–Credit Cards | 0.80 | 0.55 | |
–Unsecured Personal Loans | 0.91 | 0.78 | |
–Overdrafts | 3.49 | 3.09 | |
–Business Banking | 2.91 | 3.83 | |
Consumer Finance | 0.43 | 0.44 | |
Corporate & Commercial Banking | 1.31 | 1.04 |
30 June 2026 compared to 31 December 2025
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 slightly, due to the TSB acquisition
Loans in Stage 2 increased as £1.1bn of loans (including £1bn of mortgages), classified as Stage 2 by TSB recognised by Santander UK as Stage 1 on
acquisition suffered a SICR by 30 June 2026.
Mortgage loans in Stage 2 also decreased reflecting a sale of high RWA mortgages.
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.
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 recognised by Santander UK as
part of the TSB acquisition to be classified separately as POCI.
ECL provision
ECL provision increased by £77m to £889m (Dec-25: £812m), 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 recent events in the global economy. This was partly offset by the sale of high RWA mortgages.
6-month gross write-off utilisation of £129m (H1-25: £101m) largely driven by unsecured retail lending.
For more on the credit performance of our key portfolios by business segment, see the credit risk review section for each business segment
Santander UK plc20
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Credit quality
Total on-balance sheet exposures at 30 June 2026 comprised £235.3bn of customer loans, loans and advances to banks of £1.3bn, £16.5bn of sovereign assets
measured at amortised cost, £5.6bn of assets measured at FVOCI, and £38.3bn of cash and balances at central banks.
Stage 1 | Stage 2 | Stage 34 | POCI | Total | |
30 June 2026 | £m | £m | £m | £m | £m |
Exposures | |||||
On-balance sheet | |||||
Retail & Business Banking | 192,435 | 16,640 | 1,325 | 425 | 210,825 |
Consumer Finance | 4,534 | 406 | 48 | — | 4,988 |
Corporate & Commercial Banking | 17,617 | 1,311 | 564 | — | 19,492 |
Corporate Centre | 61,567 | — | — | — | 61,567 |
Total on-balance sheet | 276,153 | 18,357 | 1,937 | 425 | 296,872 |
Off–balance sheet | |||||
Retail & Business Banking1 | 31,027 | 768 | 52 | 28 | 31,875 |
Consumer Finance | — | — | — | — | — |
Corporate & Commercial Banking | 9,310 | 306 | 27 | — | 9,643 |
Corporate Centre | 279 | — | — | — | 279 |
Total off–balance sheet2 | 40,616 | 1,074 | 79 | 28 | 41,797 |
Total exposures | 316,769 | 19,431 | 2,016 | 453 | 338,669 |
ECL | |||||
On-balance sheet | |||||
Retail & Business Banking | 108 | 209 | 125 | (2) | 440 |
Consumer Finance | 13 | 26 | 28 | — | 67 |
Corporate & Commercial Banking | 54 | 52 | 190 | — | 296 |
Corporate Centre | — | — | — | — | — |
Total on-balance sheet | 175 | 287 | 343 | (2) | 803 |
Off–balance sheet | |||||
Retail & Business Banking | 15 | 31 | 1 | — | 47 |
Consumer Finance | — | — | — | — | — |
Corporate & Commercial Banking | 24 | 10 | 5 | — | 39 |
Corporate Centre | — | — | — | — | — |
Total off–balance sheet | 39 | 41 | 6 | — | 86 |
Total ECL | 214 | 328 | 349 | (2) | 889 |
Coverage ratio3 | % | % | % | % | % |
On-balance sheet | |||||
Retail & Business Banking | 0.1 | 1.3 | 9.5 | (0.5) | 0.2 |
Consumer Finance | 0.3 | 6.5 | 57.5 | — | 1.3 |
Corporate & Commercial Banking | 0.3 | 3.9 | 33.6 | — | 1.5 |
Corporate Centre | — | — | — | — | — |
Total on-balance sheet | 0.1 | 1.6 | 17.7 | (0.5) | 0.3 |
Off–balance sheet | |||||
Retail & Business Banking | — | 4.1 | 2.9 | 0.9 | 0.1 |
Consumer Finance | — | — | — | — | — |
Corporate & Commercial Banking | 0.3 | 3.1 | 18.4 | — | 0.4 |
Corporate Centre | — | — | — | — | — |
Total off-balance sheet | 0.1 | 3.8 | 8.2 | 0.9 | 0.2 |
Total coverage | 0.1 | 1.7 | 17.4 | (0.4) | 0.3 |
1Off-balance sheet exposures include £9.1bn of residential mortgage offers in the pipeline.
2Off-balance sheet amounts consist of contingent liabilities and commitments. For more, see Note 24.
3ECL as a percentage of the related exposure.
4Accounting rules require credit impaired loans acquired as part of the TSB acquisition to be classified separately as Purchased or Originated Credit-Impaired (POCI).
Santander UK plc21
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Total on-balance sheet exposures at 31 December 2025 comprised £197.4bn of customer loans, loans and advances to banks of £1.0bn, £21.7bn of sovereign
assets measured at amortised cost, £5.2bn of assets measured at FVOCI, and £29.4bn of cash and balances at central banks.
Stage 1 | Stage 2 | Stage 34 | Total | |
31 December 2025 | £m | £m | £m | £m |
Exposures | ||||
On-balance sheet | ||||
Retail & Business Banking | 156,212 | 15,657 | 1,592 | 173,461 |
Consumer Finance | 4,595 | 336 | 48 | 4,979 |
Corporate & Commercial Banking | 16,859 | 1,445 | 623 | 18,927 |
Corporate Centre | 57,305 | — | — | 57,305 |
Total on-balance sheet | 234,971 | 17,438 | 2,263 | 254,672 |
Off–balance sheet | ||||
Retail & Business Banking1 | 27,026 | 752 | 51 | 27,829 |
Consumer Finance | — | — | — | — |
Corporate & Commercial Banking | 8,074 | 334 | 26 | 8,434 |
Corporate Centre | 2,558 | — | — | 2,558 |
Total off–balance sheet2 | 37,658 | 1,086 | 77 | 38,821 |
Total exposures | 272,629 | 18,524 | 2,340 | 293,493 |
ECL | ||||
On-balance sheet | ||||
Retail & Business Banking | 54 | 207 | 123 | 384 |
Consumer Finance | 14 | 21 | 28 | 63 |
Corporate & Commercial Banking | 53 | 35 | 194 | 282 |
Corporate Centre | — | — | — | — |
Total on-balance sheet | 121 | 263 | 345 | 729 |
Off–balance sheet | ||||
Retail & Business Banking | 11 | 29 | 2 | 42 |
Consumer Finance | — | — | — | — |
Corporate & Commercial Banking | 25 | 9 | 7 | 41 |
Corporate Centre | — | — | — | — |
Total off–balance sheet | 36 | 38 | 9 | 83 |
Total ECL | 157 | 301 | 354 | 812 |
Coverage ratio3 | % | % | % | % |
On-balance sheet | ||||
Retail & Business Banking | — | 1.3 | 7.7 | 0.2 |
Consumer Finance | 0.3 | 6.2 | 58.4 | 1.3 |
Corporate & Commercial Banking | 0.3 | 2.4 | 31.1 | 1.5 |
Corporate Centre | — | — | — | — |
Total on-balance sheet | 0.1 | 1.5 | 15.2 | 0.3 |
Off–balance sheet | ||||
Retail & Business Banking | — | 3.9 | 2.7 | 0.1 |
Consumer Finance | — | — | — | — |
Corporate & Commercial Banking | 0.3 | 2.7 | 28.1 | 0.5 |
Corporate Centre | — | — | — | — |
Total off-balance sheet | 0.1 | 3.5 | 11.4 | 0.2 |
Total coverage | 0.1 | 1.6 | 15.1 | 0.3 |
1Off-balance sheet exposures include £8.8bn of residential mortgage offers in the pipeline.
2Off-balance sheet amounts consist of contingent liabilities and commitments. For more, see Note 24.
3ECL as a percentage of the related exposure.
4Accounting rules require credit impaired loans acquired as part of the TSB acquisition to be classified separately as Purchased or Originated Credit-Impaired (POCI).
Santander UK plc22
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Stage 2 analysis
The following table analyses our Stage 2 exposures and ECL by the reason the exposure is classified as Stage 2.
30 June 2026 | Backstop | Quantitative | Qualitative | JAs | Total | |||
30 DPD | PD deterioration | PD threshold | Forbearance | Other1 | Mortgage Refinancing | |||
Retail & Business Banking | Exposure £m | 470 | 9,539 | 371 | 446 | 5,094 | 720 | 16,640 |
ECL £m | 20 | 119 | 26 | 6 | 34 | 4 | 209 | |
Of which -Mortgages | Exposure £m | 399 | 8,947 | 269 | 424 | 5,000 | 720 | 15,759 |
ECL £m | 5 | 39 | 3 | 3 | 14 | 4 | 68 | |
Consumer Finance | Exposure £m | 53 | 165 | 9 | 2 | 177 | — | 406 |
ECL £m | 12 | 6 | 4 | — | 4 | — | 26 | |
Corporate & Commercial Banking | Exposure £m | 16 | 707 | 134 | 53 | 401 | — | 1,311 |
ECL £m | 2 | 13 | 18 | 1 | 18 | — | 52 | |
Corporate Centre | Exposure £m | — | — | — | — | — | — | — |
ECL £m | — | — | — | — | — | — | — | |
Total Drawn | Exposure £m | 539 | 10,411 | 514 | 501 | 5,672 | 720 | 18,357 |
ECL £m | 34 | 138 | 48 | 7 | 56 | 4 | 287 | |
Undrawn | ECL £m | — | 26 | 5 | 1 | 9 | — | 41 |
Total Reported | Exposure £m | 552 | 11,072 | 558 | 549 | 5,980 | 720 | 19,431 |
ECL £m | 34 | 164 | 53 | 8 | 65 | 4 | 328 | |
31 December 2025 | Backstop | Quantitative | Qualitative | JAs | Total | |||
30 DPD | PD deterioration | PD threshold | Forbearance | Other1 | Mortgage Refinancing | |||
Retail & Business Banking | Exposure £m | 463 | 8,945 | 389 | 485 | 4,965 | 410 | 15,657 |
ECL £m | 17 | 120 | 27 | 5 | 36 | 2 | 207 | |
Of which -Mortgages | Exposure £m | 394 | 8,365 | 281 | 474 | 4,855 | 410 | 14,779 |
ECL £m | 5 | 40 | 3 | 3 | 16 | 2 | 69 | |
Consumer Finance | Exposure £m | 31 | 170 | 13 | 2 | 120 | — | 336 |
ECL £m | 8 | 8 | 4 | — | 1 | — | 21 | |
Corporate & Commercial Banking | Exposure £m | 92 | 771 | 90 | 22 | 470 | — | 1,445 |
ECL £m | — | 16 | 6 | — | 13 | — | 35 | |
Corporate Centre | Exposure £m | — | — | — | — | — | — | — |
ECL £m | — | — | — | — | — | — | — | |
Total Drawn | Exposure £m | 586 | 9,886 | 492 | 509 | 5,555 | 410 | 17,438 |
ECL £m | 25 | 144 | 37 | 5 | 50 | 2 | 263 | |
Undrawn | ECL £m | — | 23 | 6 | 1 | 8 | — | 38 |
Total Reported | Exposure £m | 616 | 10,504 | 536 | 551 | 5,907 | 410 | 18,524 |
ECL £m | 25 | 167 | 43 | 6 | 58 | 2 | 301 | |
1Mainly consists of Qualitative triggers for Mortgages, over-indebted customers c. £2.6bn (2025: c.£2.6bn), Interest-only accounts 24 months pre-maturity c.£1.6bn (2025: c.£1.4bn), and for CCB customers
operating in a high-risk sector c. £0.1bn (2025: c. £0.2bn).
Where balances satisfy more than one of the criteria above for determining a SICR, we have assigned the corresponding gross carrying amount and ECL in
order of the categories presented.
Santander UK plc23
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Reconciliation of exposures, loss allowance and net carrying amounts
The table below shows the relationships between disclosures in this Credit risk review section which refer to drawn exposures and the associated ECL, and the
total assets as presented in the Consolidated Balance Sheet. The Credit risk review disclosures exclude Joint ventures, as they carry low credit risk and therefore
have an immaterial ECL, and Other items, mainly accrued interest that we have not yet charged to the customer's account and cash collateral.
On-balance sheet | Off-balance sheet | |||||
Exposures | Loss allowance | Net carrying amount | Exposures | Loss allowance | ||
30 June 2026 | £m | £m | £m | £m | £m | |
Retail & Business Banking1 | 210,825 | 440 | 210,385 | 31,875 | 47 | |
Consumer Finance | 4,988 | 67 | 4,921 | — | — | |
Corporate & Commercial Banking | 19,492 | 296 | 19,196 | 9,643 | 39 | |
Corporate Centre | 61,567 | — | 61,567 | 279 | — | |
Total exposures presented in Credit Quality tables | 296,872 | 803 | 296,069 | 41,797 | 86 | |
Intercompany balances (including joint ventures) | 5,176 | |||||
Other items2 | 728 | |||||
Adjusted net carrying amount | 301,973 | |||||
Assets classified at FVTPL | 2,142 | |||||
Non-financial assets3 | 8,160 | |||||
Total assets per the Consolidated Balance Sheet | 312,275 | |||||
31 December 2025 | ||||||
Retail & Business Banking1 | 173,461 | 384 | 173,077 | 27,829 | 42 | |
Consumer Finance | 4,979 | 63 | 4,916 | — | — | |
Corporate & Commercial Banking | 18,927 | 282 | 18,645 | 8,434 | 41 | |
Corporate Centre | 57,305 | — | 57,305 | 2,558 | — | |
Total exposures presented in Credit Quality tables | 254,672 | 729 | 253,943 | 38,821 | 83 | |
Intercompany balances (including joint ventures) | 5,055 | |||||
Other items2 | 916 | |||||
Adjusted net carrying amount | 259,914 | |||||
Assets classified at FVTPL | 934 | |||||
Non-financial assets3 | 5,989 | |||||
Total assets per the Consolidated Balance Sheet | 266,837 | |||||
1Off-balance sheet exposures include offers in the pipeline, undrawn flexible mortgage products and credit cards.
2Other includes accrued interest of£825m (2025: £725m).
3Non-financial assets includes £385m (2025: £80m) of Macro hedge of interest rate risk.
Santander UK plc24
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presents total gross carrying amounts and ECLs at a Santander UK group level. We present segmental views in the sections below.
Stage 1 | Stage 2 | Stage 3 | POCI | Total | ||||||
Exposures1 | ECL | Exposures1 | ECL | Exposures1 | ECL | Exposures1 | ECL | Exposures1 | ECL | |
£m | £m | £m | £m | £m | £m | £m | £m | £m | £m | |
At 1 January 2026 | ||||||||||
Transfers from Stage 1 to Stage 22 | ( | ( | ||||||||
Transfers from Stage 2 to Stage 12 | ( | ( | ||||||||
Transfers to Stage 32 | ( | ( | ( | ( | ||||||
Transfers from Stage 32 | ( | ( | ||||||||
Transfers of financial instruments | ( | ( | ||||||||
Net ECL remeasurement on stage transfer3 | ( | |||||||||
Change in economic scenarios4 | ||||||||||
Change to ECL models | ||||||||||
Acquisition of TSB | ||||||||||
New lending and assets purchased5, 8 | ||||||||||
Redemptions, repayments and assets sold6, 8 | ( | ( | ( | ( | ( | ( | ( | ( | ( | |
Changes in risk parameters and other movements7 | ( | ( | ( | ( | ||||||
Assets written off6 | ( | ( | ( | ( | ( | ( | ||||
At 30 June 2026 | ( | |||||||||
Net movement in the period | ( | ( | ( | |||||||
ECL charge to the Income Statement | ||||||||||
Less: Discount unwind | ( | ( | ||||||||
Less: Recoveries net of collection costs | ( | |||||||||
Total ECL charge to the Income Statement | ||||||||||
Stage 1 | Stage 2 | Stage 3 | Total | |||||
Exposures1 | ECL | Exposures1 | ECL | Exposures1 | ECL | Exposures1 | ECL | |
£m | £m | £m | £m | £m | £m | £m | £m | |
At 1 January 2025 | ||||||||
Transfers from Stage 1 to Stage 22 | ( | ( | ||||||
Transfers from Stage 2 to Stage 12 | ( | ( | ||||||
Transfers to Stage 32 | ( | ( | ( | ( | ||||
Transfers from Stage 32 | ( | ( | ||||||
Transfers of financial instruments | ( | ( | ( | ( | ||||
Net ECL remeasurement on stage transfer3 | ( | |||||||
Change in economic scenarios4 | ( | ( | ( | |||||
Change to ECL models | ||||||||
New lending and assets purchased5 8 | ||||||||
Redemptions, repayments and assets sold6 8 | ( | ( | ( | ( | ( | ( | ( | ( |
Changes in risk parameters and other movements7 | ( | ( | ( | ( | ||||
Assets written off6 | ( | ( | ( | ( | ||||
At 30 June 2025 | ||||||||
Net movement in the period | ( | ( | ( | ( | ||||
ECL (release)/charge to the Income Statement | ( | ( | ||||||
Less: Discount unwind | ( | ( | ||||||
Less: Recoveries net of collection costs | ||||||||
Total ECL (release)/charge to the Income Statement | ( | ( | ||||||
1Exposures that have attracted an ECL, and as reported in the Credit Quality table above.
2Total impact of facilities that moved Stage(s) in the period. This means, for example, that where risk parameter changes (model inputs) or model changes (methodology) result in a facility moving Stage, the full
impact is reflected here (rather than in Other). Stage flow analysis only applies to facilities that existed at both the start and end of the period. Transfers between Stages are based on opening balances and ECL
at the start of the period.
3Relates to the revaluation of ECL following the transfer of an exposure from one Stage to another.
4Changes to assumptions in the period. Isolates the impact on ECL from changes to the economic variables for each scenario, the scenarios themselves, and the probability weights from all other movements.
Also includes the impact of quarterly revaluation of collateral. The impact of changes in economics on exposure Stage allocations are shown in Transfers of financial instruments.
5Exposures and ECL of facilities that did not exist at the start of the period but did at the end. Amounts in Stage 2 and 3 represent assets which deteriorated in the period after origination in Stage 1.
6Exposures and ECL for facilities that existed at the start of the period but not at the end.
7Residual movements on existing facilities that did not change Stage in the period, and which were not acquired in the period. Includes the net increase or decrease in the period of the mortgage pipeline, cash at
central banks, the impact of changes in risk parameters in the period, unwind of discount rates and increases in ECL requirements of accounts which ultimately were written off in the period.
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8New lending and assets purchased and Redemptions, repayments and assets sold categories include internal transfers.
30 June 2026 compared to 30 June 2025
Credit impairment charges were up £172m, mainly due to the acquisition of TSB, including a day 1 charge of £62 m 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 recent events in the global economy.
Santander UK plc26
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RETAIL & BUSINESS BANKING – CREDIT RISK REVIEW
We provide detailed credit risk analysis for Retail & Business Banking in separate sections below for Mortgages, our largest portfolio, and our Everyday Banking
portfolio.
Retail & Business Banking: Mortgages – Credit risk review
Borrower profile
Stock | New business | ||||||||
30 June 2026 | 31 December 2025 | 30 June 2026 | 30 June 2025 | ||||||
£m | % | £m | % | £m | % | £m | % | ||
Home movers1 | 81,411 | 40 | 69,963 | 42 | 6,369 | 44 | 4,192 | 39 | |
Remortgagers2 | 62,797 | 31 | 47,242 | 28 | 6,020 | 41 | 3,909 | 37 | |
First-time buyers | 39,654 | 20 | 34,776 | 21 | 1,659 | 11 | 1,613 | 15 | |
Buy-to-let | 18,782 | 9 | 15,287 | 9 | 613 | 4 | 906 | 9 | |
202,644 | 100 | 167,268 | 100 | 14,661 | 100 | 10,620 | 100 | ||
Movement in mortgage lending | £bn |
1 January 2026 | 167.3 |
New business | 14.7 |
Acquisition of TSB | 33.9 |
Redemptions and repayments | (13.3) |
30 June 2026 | 202.6 |
30 June 2026 | 31 December 2025 | ||
Proportion of Santander-branded mortgage internal transfers retained online | 83% | 79% |
30 June 2026 | 30 June 2025 | ||
Internal transfers (£bn)3 | 18.4 | 14.9 | |
Further advances and flexi drawdowns (£bn) | 0.5 | 0.5 |
1Home 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.
2Remortgagers are new customers who are taking a new mortgage with us.
3Internal remortgages are where we moved our customers with maturing mortgages onto new ones.
30 June 2026 compared to 31 December 2025
In H1-26, the mortgage asset value increased due to business growth and the acquisition of TSB, whilst the borrower profile remained broadly stable. First-time
buyer applications increased in H1-26, supported by greater strategic focus and the launch of the My First Mortgage product.
Interest rate profile
The interest rate profile of our maturing mortgage asset stock was:
30 June 2026 | 31 December 2025 | ||||
£m | % | £m | % | ||
Fixed rate | 185,682 | 91 | 153,172 | 92 | |
Of which maturing: | |||||
–< 12 months | 59,875 | 29 | 41,262 | 25 | |
–Later than 1 year but no later than 3 years | 89,950 | 44 | 83,529 | 50 | |
–Later than 3 years but no later than 4 years | 13,261 | 7 | 11,431 | 7 | |
–Later than 4 years but no later than 5 years | 19,569 | 10 | 14,011 | 8 | |
–Later than 5 years | 3,027 | 1 | 2,939 | 2 | |
Variable rate | 11,961 | 6 | 10,227 | 6 | |
Standard Variable Rate (SVR) | 3,783 | 2 | 2,434 | 1 | |
Follow on Rate (FoR) | 1,218 | 1 | 1,435 | 1 | |
202,644 | 100 | 167,268 | 100 | ||
30 June 2026 compared to 31 December 2025
In H1-26, customers continued to refinance from reversion (SVR and FoR) to fixed rate products influenced by continued uncertainty on interest rates. Despite
this, reversion balances increased following the TSB acquisition, as it has a higher proportion of reversion balances. Demand for fixed rate products remained
strong, particularly those with shorter fixed rate terms.
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Geographical distribution
The geographical distribution of our mortgage asset stock and new business was:
Stock | New business | ||||
30 June 2026 | 31 December 2025 | 30 June 2026 | 30 June 2025 | ||
Region | £bn | £bn | £bn | £bn | |
London | 49.3 | 43.9 | 3.2 | 3.1 | |
Midlands and East Anglia | 29.6 | 23.4 | 2.3 | 1.4 | |
North | 28.9 | 21.8 | 2.2 | 1.3 | |
Northern Ireland | 2.1 | 2.2 | 0.1 | 0.1 | |
Scotland | 9.9 | 6.0 | 0.7 | 0.4 | |
South East excluding London | 60.9 | 52.7 | 4.6 | 3.3 | |
South West, Wales and other | 21.9 | 17.3 | 1.6 | 1.0 | |
202.6 | 167.3 | 14.7 | 10.6 | ||
30 June 2026 compared to 31 December 2025
Following the acquisition of TSB, the portfolio's geographical distribution continued to represent a broad footprint across the UK, with a concentration around
London and the South East. The loan-to-income multiple of mortgage lending in the period, based on average earnings of new business at inception, was 2.62
(2025: 2.91).
Mortgage loan size
The split of our mortgage asset by size was:
Mortgage loan size | 30 June 2026 | 31 December 2025 | |
>£1.0m | 3% | 3% | |
£0.5m to £1.0m | 10% | 11% | |
£0.25m to £0.5m | 32% | 32% | |
<£0.25m | 55% | 54% | |
Average loan size (stock)1 | £200k | £201k | |
Average loan size (new business) | £249k | £254k |
1 Average initial advance of existing stock.
Loan-to-value analysis
This table shows the LTV distribution for the gross carrying amount and the related ECL of our total mortgage portfolio and Stage 3 mortgages, and new
business. We also show the collateral value and average LTV. We use our estimate of the property value at the balance sheet date and include fees that have
been added to the loan. For flexible products, we only include the drawn amount, not undrawn limits.
30 June 2026 | 31 December 2025 | 30 June 2025 | |||||||||
Stock | Stage 3 | New Business | Stock | Stage 3 | New Business | ||||||
Total | ECL | Total | ECL | Total | ECL | Total | ECL | ||||
LTV | £m | £m | £m | £m | £m | £m | £m | £m | £m | £m | |
Up to 50% | 87,087 | 26 | 545 | 8 | 2,930 | 75,743 | 29 | 705 | 10 | 2,548 | |
>50-60% | 38,488 | 18 | 230 | 4 | 2,412 | 33,122 | 17 | 270 | 6 | 2,020 | |
>60-70% | 32,962 | 20 | 180 | 6 | 2,261 | 27,776 | 21 | 210 | 9 | 1,664 | |
>70-80% | 25,185 | 21 | 101 | 6 | 2,881 | 18,466 | 19 | 122 | 7 | 2,192 | |
>80-90% | 15,091 | 17 | 51 | 6 | 2,712 | 9,385 | 15 | 64 | 7 | 1,526 | |
>90-100% | 3,594 | 11 | 28 | 4 | 1,456 | 2,503 | 10 | 30 | 4 | 662 | |
>100% | 237 | 23 | 40 | 13 | 9 | 273 | 26 | 49 | 14 | 8 | |
202,644 | 136 | 1,175 | 47 | 14,661 | 167,268 | 137 | 1,450 | 57 | 10,620 | ||
Collateral value1 | 202,609 | 1,168 | 14,661 | 167,234 | 1,441 | 10,620 | |||||
% | % | % | % | % | % | ||||||
Average balance weighted LTV2 | 53 | 53 | 66 | 52 | 52 | 63 | |||||
Of which: | |||||||||||
London lending (new business) | 64 | 62 | |||||||||
1Collateral value is limited to the balance of each loan and excludes the impact of any over-collateralisation. Includes collateral against loans in negative equity of £203m (2025: £240m).
2Balance weighted LTV = (Loan 1 balance x (Loan 1 Balance/Loan 1 latest property valuation) + (Loan 2 balance x (Loan 2 balance/Loan 2 latest property valuation) + ...) /(Loan 1 balance + Loan 2 balance+...).
30 June 2026 compared to 31 December 2025
There were no significant changes in collateral quality in H1-26. Average balance weighted LTVs increased slightly following the acquisition of TSB. Stock
balances above 80% LTV increased from 7% in Dec-25 to 9%, driven by the TSB acquisition and business growth. We continue to monitor new lending closely
and take action where needed to ensure lending remains within our risk appetite.
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Credit performance
For credit performance details, see the Credit performance section in Santander UK Group level - Credit risk review.
Movement in total exposures and the corresponding ECL
The following tables show changes in total on and off-balance sheet exposures and ECL in the period. The footnotes to the Santander UK group level table on
page 24 also apply to these tables.
Stage 1 | Stage 2 | Stage 3 | POCI | Total | ||||||
Exposures1 | ECL | Exposures1 | ECL | Exposures1 | ECL | Exposures1 | ECL | Exposures1 | ECL | |
£m | £m | £m | £m | £m | £m | £m | £m | £m | £m | |
At 1 January 2026 | 163,834 | 11 | 15,041 | 69 | 1,464 | 57 | — | — | 180,339 | 137 |
Transfers from Stage 1 to Stage 22 | (5,878) | (3) | 5,878 | 3 | — | — | — | — | — | — |
Transfers from Stage 2 to Stage 12 | 2,951 | 11 | (2,951) | (11) | — | — | — | — | — | — |
Transfers to Stage 32 | (69) | — | (268) | (3) | 337 | 3 | — | — | — | — |
Transfers from Stage 32 | — | — | 135 | 3 | (135) | (3) | — | — | — | — |
Transfers of financial instruments | (2,996) | 8 | 2,794 | (8) | 202 | — | — | — | — | — |
Net ECL remeasurement on stage transfer3 | — | (11) | — | 13 | — | 4 | — | — | — | 6 |
Change in economic scenarios4 | — | 1 | — | — | — | 1 | — | — | — | 2 |
Change to ECL models | — | — | — | — | — | — | — | — | — | — |
Acquisition of TSB | 35,426 | 11 | — | — | — | — | 408 | — | 35,834 | 11 |
New lending and assets purchased5 8 | 23,197 | 5 | 173 | 2 | 21 | 1 | — | — | 23,391 | 8 |
Redemptions, repayments and assets sold6 8 | (12,801) | (1) | (1,974) | (13) | (470) | (14) | (7) | — | (15,252) | (28) |
Changes in risk parameters and other movements7 | (6,729) | (3) | (53) | 5 | 13 | 7 | (4) | 1 | (6,773) | 10 |
Assets written off6 | — | — | — | — | (42) | (9) | (1) | (1) | (43) | (10) |
At 30 June 2026 | 199,931 | 21 | 15,981 | 68 | 1,188 | 47 | 396 | — | 217,496 | 136 |
Net movement in the period | 36,097 | 10 | 940 | (1) | (276) | (10) | 396 | — | 37,157 | (1) |
ECL charge/(release) to the Income Statement | 10 | (1) | (1) | 1 | 9 | |||||
Less: Discount unwind | — | — | (1) | — | (1) | |||||
Less: Recoveries net of collection costs | — | — | 81 | — | 81 | |||||
Total ECL charge/(release) to the Income Statement | 10 | (1) | 79 | 1 | 89 | |||||
At 1 January 2025 | 157,268 | 10 | 16,973 | 84 | 1,785 | 78 | — | — | 176,026 | 172 |
Transfers from Stage 1 to Stage 22 | (3,908) | — | 3,908 | — | — | — | — | — | — | — |
Transfers from Stage 2 to Stage 12 | 3,902 | 10 | (3,902) | (10) | — | — | — | — | — | — |
Transfers to Stage 32 | (54) | — | (339) | (4) | 393 | 4 | — | — | — | — |
Transfers from Stage 32 | — | — | 276 | 8 | (276) | (8) | — | — | — | — |
Transfers of financial instruments | (60) | 10 | (57) | (6) | 117 | (4) | — | — | — | — |
Net ECL remeasurement on stage transfer3 | — | (9) | — | 7 | — | 6 | — | — | — | 4 |
Change in economic scenarios4 | — | (5) | — | (5) | — | (4) | — | — | — | (14) |
Change to ECL models | — | — | — | — | — | — | — | — | — | — |
New lending and assets purchased5 8 | 19,002 | 3 | 119 | 2 | 18 | 1 | — | — | 19,139 | 6 |
Redemptions, repayments and assets sold6 8 | (10,407) | — | (1,247) | (4) | (243) | (7) | — | — | (11,897) | (11) |
Changes in risk parameters and other movements7 | (4,700) | — | 28 | 1 | 15 | 7 | — | — | (4,657) | 8 |
Assets written off6 | — | — | — | — | (27) | (7) | — | — | (27) | (7) |
At 30 June 2025 | 161,103 | 9 | 15,816 | 79 | 1,665 | 70 | — | — | 178,584 | 158 |
Net movement in the period | 3,835 | (1) | (1,157) | (5) | (120) | (8) | — | — | 2,558 | (14) |
ECL release to the Income Statement | (1) | (5) | (1) | — | (7) | |||||
Less: Discount unwind | — | — | (1) | — | (1) | |||||
Less: Recoveries net of collection costs | — | — | 10 | — | 10 | |||||
Total ECL (release)/charge to the Income Statement | (1) | (5) | 8 | — | 2 | |||||
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Portfolios of particular interest - Mortgages
As set out in the 2025 Annual Report, some types of mortgages have higher risks and others stand out for different reasons.
Key changes in H1-26
In H1-26, the only changes to the portfolios considered to be of particular interest arose as a result of the acquisition of TSB, which includes a portfolio of ex-
Northern Rock residential mortgages acquired by TSB from Cerberus Capital Management group in 2015 (the Whistletree portfolio).
Credit performance
Total | Stage 1 | Stage 2 | Stage 3 | Stage 3 ratio | POCI | Properties in possession | Balance weighted LTV (indexed) | |
30 June 2026 | £m | £m | £m | £m | % | £m | £m | % |
Mortgage portfolio | 202,644 | 185,314 | 15,759 | 1,175 | 0.59 | 396 | 62 | 53 |
Of which: Portfolio of particular interest1 | ||||||||
– Interest only | 39,804 | 33,608 | 5,557 | 492 | 1.24 | 147 | 23 | 45 |
– Part interest-only, part repayment2 | 11,253 | 9,773 | 1,359 | 121 | 1.08 | — | 8 | 53 |
– Flexible | 3,172 | 2,252 | 776 | 144 | 4.54 | — | 9 | 37 |
– LTV >100% | 237 | 69 | 124 | 40 | 16.88 | 4 | 15 | 111 |
– Buy-to-let | 18,782 | 17,386 | 1,305 | 52 | 0.28 | 39 | 3 | 52 |
– Whistletree | 463 | 356 | 33 | 2 | 0.43 | 72 | — | 41 |
31 December 2025 | ||||||||
Mortgage portfolio | 167,268 | 151,039 | 14,779 | 1,450 | 0.88 | 74 | 52 | |
Of which: Portfolio of particular interest1 | ||||||||
– Interest only | 35,637 | 29,866 | 5,155 | 616 | 1.74 | 35 | 49 | |
– Part interest-only, part repayment2 | 11,495 | 9,978 | 1,357 | 160 | 1.40 | 9 | 53 | |
– Flexible | 3,504 | 2,508 | 828 | 168 | 5.19 | 11 | 37 | |
– LTV >100% | 273 | 88 | 136 | 49 | 17.91 | 18 | 116 | |
– Buy-to-let | 15,287 | 14,166 | 1,070 | 51 | 0.33 | 4 | 59 | |
1.Where a loan falls into more than one category, we include it in all the categories that apply.
2.Mortgage balance includes both the interest-only part of £8,566m (2025: £8,769m) and the non-interest-only part of the loan.
Retail & Business Banking: Everyday Banking – Credit risk review
Credit performance
For credit performance details, see the Credit performance section in Santander UK Group level - Credit risk review. In addition, we monitor the following credit
performance metrics that are specific to Everyday Banking:
30 June 2026 | 31 December 2025 | ||
BBLS with 100% Government Guarantee (£bn) | 0.5 | 0.6 | |
% of credit card customers that repay balance in full each month | 53% | 54% | |
UPL average customer balance (£) | 6,000 | 6,000 |
CONSUMER FINANCE – CREDIT RISK REVIEW
Credit Performance
For credit performance details, see the Credit performance section in Santander UK Group level - Credit risk review. In addition, we monitor the following credit
performance metrics that are specific to Consumer Finance:
30 June 2026 | 31 December 2025 | ||
Wholesale loans (stock finance) to car dealerships as approximate % of the Consumer loan book | 11.6% | 13.8% | |
% of lending collateralised on the vehicle | 99% | 98% | |
Average Consumer (auto) finance loan size (£) | 21,603 | 19,551 |
30 June 2026 | 30 June 2025 | ||
Consumer (auto) finance new business gross lending (£m) | 1,153 | 1,034 |
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CORPORATE & COMMERCIAL BANKING – CREDIT RISK REVIEW
Rating distribution
These tables show our credit risk exposure according to our internal rating scale (see the ‘Santander UK group level – credit risk review’ section) for each
portfolio. On this scale, the higher the rating, the better the quality of the counterparty.
Santander UK risk grade | |||||||||
9 | 8 | 7 | 6 | 5 | 4 | 3 to 1 | Other | Total1 | |
30 June 2026 | £m | £m | £m | £m | £m | £m | £m | £m | £m |
SME and mid corporate | — | 344 | 1,169 | 3,810 | 4,505 | 2,917 | 1,357 | 40 | 14,142 |
Commercial Real Estate | — | 1 | 898 | 3,273 | 2,028 | 280 | 122 | — | 6,602 |
Social Housing | 137 | 2,248 | 5,967 | — | — | — | — | — | 8,352 |
137 | 2,593 | 8,034 | 7,083 | 6,533 | 3,197 | 1,479 | 40 | 29,096 | |
Of which: | |||||||||
–Stage 1 | 137 | 2,590 | 8,026 | 7,039 | 6,147 | 2,466 | 443 | 40 | 26,888 |
–Stage 2 | — | 3 | 8 | 44 | 386 | 731 | 445 | — | 1,617 |
–Stage 3 | — | — | — | — | — | — | 591 | — | 591 |
31 December 2025 | |||||||||
SME and mid corporate | — | 449 | 903 | 3,364 | 4,172 | 3,069 | 1,604 | 36 | 13,597 |
Commercial Real Estate | — | — | 802 | 2,589 | 2,360 | 411 | 134 | — | 6,296 |
Social Housing | 120 | 2,032 | 5,581 | — | — | — | — | — | 7,733 |
120 | 2,481 | 7,286 | 5,953 | 6,532 | 3,480 | 1,738 | 36 | 27,626 | |
Of which: | |||||||||
–Stage 1 | 120 | 2,481 | 7,278 | 5,910 | 6,219 | 2,710 | 444 | 36 | 25,198 |
–Stage 2 | — | — | 8 | 43 | 313 | 770 | 645 | — | 1,779 |
–Stage 3 | — | — | — | — | — | — | 649 | — | 649 |
1 Credit risk exposures include derivatives exposures. For invoice finance the credit risk exposures represent the full facility limit present on the credit agreement papers, a total limit before consideration of
underlying collaterals and application of prepayment caps for any given point.
Credit performance
For credit performance details, see the Credit performance section in Santander UK Group level - Credit risk review.
Portfolios of particular interest - Commercial Real Estate
In H1-26, committed exposures increased by 4.9%, driven by an increase across all portfolios. The overall rating distribution saw a general improvement with
lending to new higher rated clients.
CORPORATE CENTRE – CREDIT RISK REVIEW
Committed exposures
Rating distribution
Corporate Centre committed exposures mainly comprise Sovereign exposures and Structured Products (High Quality Liquid Assets, mainly Asset Backed
Securities and covered bonds) managed as part of our Eligible Liquidity Pool. These are low risk, high quality, investment grade exposures with a credit rating of
8 or 9 according to our internal rating scale (see the ‘Santander UK group level – credit risk review’ section).
Credit performance
For credit performance details, see the Credit performance section in Santander UK Group level - Credit risk review.
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Liquidity risk
Overview Liquidity risk is the risk that we do not have sufficient liquid financial resources available to meet our obligations as they fall due, or we can only secure such resources at high cost. Liquidity risk management In H1-26, there were no significant changes in the way we manage liquidity risk as described in the 2025 Annual Report, including as a result of the TSB acquisition. Liquidity risk review In this section, we analyse our key liquidity metrics and our wholesale funding. We also provide information on asset encumbrance. | Key metrics LCR of 163% (2025: 162%) LCR eligible liquidity pool of £54.6bn (2025: £47.5bn) NSFR of 137% (2025: 135%) Wholesale funding with maturity <1 year £20.1bn (2025: £13.1bn) |
The liquidity metrics presented include TSB from the date of acquisition. TSB continues to operate within its existing liquidity risk management and regulatory
requirements.
Following the acquisition of TSB, we now focus our liquidity risk disclosures on metrics for the consolidated Santander UK group (which includes TSB), rather
than for the RFB DoLSub group (which does not include TSB, as it is not a party to the RFB DoLSub agreement).
LIQUIDITY RISK REVIEW
Liquidity Coverage Ratio
This table shows our LCR at 30 June 2026 and 31 December 2025.
30 June 2026 | 31 December 2025 | ||
LCR2 | £bn | £bn | |
Eligible liquidity pool (liquidity value)1 | 54.2 | 46.9 | |
Net stress outflows | (33.2) | (29.0) | |
Surplus | 21.0 | 17.9 | |
Eligible liquidity pool as a percentage of anticipated net cash flows | 163% | 162% |
1The liquidity value is calculated as applying an applicable haircut to the carrying value.
2The RFB DolSub LCR was 156% (2025:157%).
30 June 2026 compared to 31 December 2025
LCR increased to 163% (Dec-25: 162%).
LCR eligible liquidity pool
LCR eligible liquid assets surplus of £21.0bn to regulatory requirements.
LCR eligible liquidity pool of £54.6bn (Dec-25: £47.5bn), includes £37.1bn cash and central bank reserves (Dec-25: £28.4bn).
30 June 2026 compared to 31 December 2025
We remained in a strong liquidity position. We held sufficient liquid resources and had adequate governance and controls in place to manage the liquidity risks
arising from our business and strategy, including TSB. At 30 June 2026 and 31 December 2025, the LCR significantly exceeded regulatory requirements.
Net Stable Funding Ratio (NSFR)
30 June 2026 | 31 December 2025 | ||
% | % | ||
NSFR | 137 | 135 |
30 June 2026 compared to 31 December 2025
At 30 June 2026 and 31 December 2025, the NSFR significantly exceeded regulatory requirements.
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FUNDING RISK REVIEW
Our funding strategy continues to be based on maintaining a conservatively structured balance sheet and diverse sources of funding to meet the needs of our
business strategy and plans. The CFO Division maintains a funding plan that complies with our Liquidity Risk Appetite (LRA) and regulatory liquidity and capital
requirements.
Maturity profile of wholesale funding
This table shows our main sources of wholesale funding. It does not include securities finance agreements. The table is based on exchange rates at issue and
scheduled repayments and call dates. It does not reflect the final contractual maturity of the funding.
≤ 1 month | >1 and ≤ 3 months | >3 and ≤ 6 months | >6 and ≤ 9 months | >9 and ≤ 12 months | Sub-total ≤ 1 year | >1 and ≤ 2 years | >2 and ≤ 5 years | >5 years | Total | |
30 June 2026 | £bn | £bn | £bn | £bn | £bn | £bn | £bn | £bn | £bn | £bn |
Downstreamed from Santander UK Group Holdings plc to Santander UK plc1 | ||||||||||
Senior unsecured | — | — | 0.8 | 0.8 | — | 1.6 | 2.8 | 5.5 | 1.3 | 11.2 |
Subordinated liabilities and equity (incl. AT1) | — | — | — | — | 0.8 | 0.8 | 0.2 | 2.2 | 0.6 | 3.8 |
— | — | 0.8 | 0.8 | 0.8 | 2.4 | 3.0 | 7.7 | 1.9 | 15.0 | |
Other Santander UK plc | ||||||||||
Deposits by banks | 0.6 | 0.5 | 0.2 | — | — | 1.3 | — | — | — | 1.3 |
Certificates of deposit and commercial paper | 1.4 | 2.9 | — | — | 0.1 | 4.4 | 0.4 | — | — | 4.8 |
Senior unsecured | — | — | 0.1 | 0.5 | — | 0.6 | 0.9 | 1.7 | 0.2 | 3.4 |
Covered bonds | — | 0.2 | 0.1 | 3.6 | 0.6 | 4.5 | 4.6 | 7.4 | 1.6 | 18.1 |
Securitisation & structured issuance2 | 0.2 | 0.5 | 1.0 | 0.3 | 0.4 | 2.4 | 2.2 | 2.9 | — | 7.5 |
Of which: | ||||||||||
– RMBS and ABS | 0.2 | — | 0.2 | 0.3 | 0.4 | 1.1 | 2.2 | 2.9 | — | 6.2 |
TFSME | — | — | — | 2.5 | — | 2.5 | — | 1.4 | — | 3.9 |
Subordinated liabilities | — | — | — | — | — | — | — | 0.2 | 0.5 | 0.7 |
2.2 | 4.1 | 1.4 | 6.9 | 1.1 | 15.7 | 8.1 | 13.6 | 2.3 | 39.7 | |
Other group entities | ||||||||||
Senior unsecured | — | — | — | — | — | — | — | — | — | — |
Covered bonds | — | — | — | 1.0 | — | 1.0 | 0.5 | 2.2 | — | 3.7 |
Securitisation & structured issuance3 | — | 0.6 | — | — | — | 0.6 | — | 0.4 | — | 1.0 |
TFSME | — | — | — | 0.4 | — | 0.4 | — | 0.2 | — | 0.6 |
Total at 30 June 2026 | 2.2 | 4.7 | 2.2 | 9.1 | 1.9 | 20.1 | 11.6 | 24.1 | 4.2 | 60.0 |
Of which: | ||||||||||
– Secured | 0.3 | 1.3 | 1.1 | 7.8 | 1.0 | 11.5 | 7.2 | 14.5 | 1.5 | 34.7 |
– Unsecured | 1.9 | 3.4 | 1.1 | 1.3 | 0.9 | 8.6 | 4.4 | 9.6 | 2.7 | 25.3 |
Total at 31 December 2025 | 1.0 | 6.6 | 3.3 | 0.8 | 1.4 | 13.1 | 13.8 | 20.4 | 5.0 | 52.3 |
Of which: | ||||||||||
– Secured | — | 3.3 | 2.0 | 0.4 | 0.3 | 6.0 | 10.2 | 10.3 | 3.0 | 29.5 |
– Unsecured | 1.0 | 3.3 | 1.3 | 0.4 | 1.1 | 7.1 | 3.6 | 10.1 | 2.0 | 22.8 |
199% of senior unsecured debt issued from Santander UK Group Holdings plc has been downstreamed to Santander UK plc as ‘secondary non-preferential debt’ in line with the guidelines from the Bank of
England for Internal MREL.
2Includes funding from mortgage-backed securitisation vehicles where Santander UK plc is the asset originator.
3Includes funding from asset-backed securitisation vehicles where entities other than Santander UK plc are the asset originator.
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Term issuance
In H1-26, our external term issuance (sterling equivalent) was:
Sterling | US Dollar | Euro | Other | Total H1-26 | Total H1-25 | ||
£bn | £bn | £bn | £bn | £bn | £bn | ||
Downstreamed from Santander UK Group Holdings plc to Santander UK plc | |||||||
Senior unsecured | — | — | 1.5 | — | 1.5 | 1.0 | |
Subordinated liabilities and equity (inc. AT1) | 1.0 | — | — | — | 1.0 | 0.5 | |
1.0 | — | 1.5 | — | 2.5 | 1.5 | ||
Other Santander UK plc | |||||||
Securitisations and other secured funding | 1.3 | — | — | — | 1.3 | 1.0 | |
Of which: | |||||||
– RMBS and ABS | 1.3 | — | — | — | 1.3 | 1.0 | |
Covered bonds | 0.7 | — | 2.0 | — | 2.7 | 2.7 | |
Senior unsecured | 0.1 | — | — | — | 0.1 | 1.9 | |
2.1 | — | 2.0 | — | 4.1 | 5.6 | ||
Other group entities | |||||||
Securitisations | — | — | — | — | — | — | |
Total gross issuances | 3.1 | — | 3.5 | — | 6.6 | 7.1 |
We Issued £6.8bn Sterling equivalent term issuance in H1-26, including Covered bonds, RMBS, AT1 and Senior Unsecured issuances2. TFSME outstanding
balance of £4.5bn at Jun-26, of which £2.9bn is due for repayment in 2027 and £1.6bn is due in 2031. We expect to issue £8.0 to 12.0bn of term issuance in
2026, including the £6.8bn issued in H1-26.
Medium term funding at 30 June 2026 includes securities issued under TSB Bank plc’s Covered bonds and RMBS securitisation programs. TSB Bank plc’s
outstanding capital instruments and senior unsecured issuance were purchased by Santander UK plc following the TSB acquisition and therefore eliminate on
consolidation.
Encumbrance
Encumbrance of customer loans and advances
We issued securitised products to a diverse investor base through our prime mortgage-backed and other asset-backed funding programmes. We raised funding
with mortgage-backed notes, both issued to third parties and retained – the latter being central bank eligible collateral for funding purposes in other Bank of
England facilities. We also have covered bond programmes, under which we issue securities to investors secured by a pool of residential mortgages. For more
on these programmes, see Notes 14 and 25 to the Consolidated Financial Statements in the 2025 Annual Report and Note 10 to the Condensed Consolidated
Interim Financial Statements.
30 June 2026 compared to 31 December 2025
Our level of encumbrance from external and internal issuance of securitisations and covered bonds increased in H1-26 to £47.8bn (2025: £36.5bn), mainly due
to the acquisition of TSB's securitisation and covered bond programs. For more, see Note 14 to the Consolidated Financial Statements in the 2025 Annual
Report and Note 10 to the Condensed Consolidated Interim Financial Statements.
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Capital risk
Overview Capital risk is the risk that we do not have an adequate amount or quality of capital to meet our internal business objectives, regulatory requirements and market expectations. Capital risk management In H1-26, there were no significant changes in the way we manage capital risk as described in the 2025 Annual Report, including as a result of the TSB acquisition. Capital risk review In this section, we analyse our capital resources and key capital ratios. | Key metrics CET1 capital ratio of 14.2% (2025: 15.8%) Total qualifying regulatory capital of £15.8bn (2025: £14.3bn) |
CAPITAL RISK REVIEW
Meeting evolving capital requirements
We target a CET1 management buffer of sufficient size to absorb volatility in CET1 deductions, capital supply and capital demand whilst remaining above the
current and expected future regulatory CET1 requirement. Distribution restrictions would be expected to be applied if we were unable to meet both our minimum
requirement, which consists of the Pillar 1 minimum plus Pillar 2A, the CRD IV buffers consisting of the Capital Conservation Buffer (CCB), the Countercyclical
Capital Buffer (CCyB), and the Other Systemically Important Institutions Buffer (O-SII).
Key capital ratios
30 June 2026 | 31 December 2025 | ||
% | % | ||
CET1 capital ratio | 14.2 | 15.8 | |
AT1 | 2.6 | 2.8 | |
Tier 2 | 3.0 | 2.7 | |
Total capital ratio | 19.8 | 21.3 | |
Total subordination available to Santander UK plc senior unsecured bondholders as a % of RWAs | 19.8 | 21.3 | |
30 June 2026 | 30 June 2025 | ||
Return on assets - profit after tax divided by average total assets | 0.13 | 0.20 |
30 June 2026 compared to 31 December 2025
CET1 capital ratio decreased to 14.2% as we optimised capital levels alongside the acquisition of TSB and resumed declaring dividends.
The Board declared a dividend of £456m after the reporting date that was paid on 30 July 2026. Capital calculations have not been adjusted to reflect this post
balance sheet dividend.
30 June 2026 | 31 December 2025 | ||
£m | £m | ||
CET1 capital | |||
AT1 capital | |||
Tier 1 capital | |||
Tier 2 capital | |||
Total capital1 |
1Capital resources include a transitional IFRS 9 benefit at 30 June 2026 of £nil (2025: £nil ).
Risk-weighted assets
Total Risk-weighted assets at 30 June 2026 were £79.8bn (2025: £67.2bn), which are consistent with our regulatory filings.
Significant Risk Transfer (SRT)
As part of our strategy aimed at driving balance sheet optimisation, in H1-26, Santander UK completed one SRT (2025: four).
H1-26 SRT covered Corporate & Commercial Banking assets (2025: Retail & Business Banking, Corporate & Commercial Banking and Consumer Finance
assets).
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Market risk
Overview Market risk comprises banking market risk and trading market risk. Market risk management In H1-26, there were no significant changes in the way we manage market risk as described in the 2025 Annual Report, including as a result of the TSB acquisition. Market risk review In this section, we analyse our key banking and trading market risk metrics. | Key metrics Net Interest Income (NII) sensitivity to +100bps was £365m and to ‑100bps was £(256)m (2025: £281m and £(195)m). Economic Value of Equity (EVE) sensitivity to +100bps was £(646)m and to ‑100bps was £705m (2025: £(449)m and £540m). |
Interest rate risk
Yield curve risk
2026 and 31 December 2025. Sensitivity to parallel shifts represents the amount of risk in a way that we think is both simple and scalable.
30 June 2026 | 31 December 2025 | ||||
+100bps | -100bps | +100bps | -100bps | ||
£m | £m | £m | £m | ||
NII sensitivity1 | ( | ( | |||
EVE sensitivity | (646) | 705 | (449) | 540 | |
1Based on modelling assumptions of repricing behaviour.
30 June 2026 compared to 31 December 2025
During H1-26, we continued to actively manage the structural position in line with the profile of rate-insensitive liabilities to manage interest rate risk.
Both NII and EVE sensitivities increased following the acquisition of TSB. EVE sensitivity (excluding equity) also increased mainly reflecting changes to the
structural investment term of equity and the associated structural hedge.
Structural hedge evolution
Santander UK plc’s structural hedge position increased to £118bn at Jun-26 (Dec-25: £103bn) driven by the acquisition of TSB.
Average duration of 2.6 years (Dec-25: 2.3 years) was up as we extended the duration to enhance income stability.
Gross average yield from the structural hedge in H1-26 was 3.11% (H1-25: 2.51%); with Q2-26: 3.19% and Q1-26: 3.01%.
Structural hedge gross yields remained supportive in H1-26, partially offsetting continued pressure on customer margins and deposit mix.
We continue to manage our structural hedge position for income stability.
TRADED MARKET RISK REVIEW
30 June 2026 compared to 31 December 2025
In H1-26, there were no significant changes to our traded market risk exposures. The Internal VaR for exposure to traded market risk at 30 June 2026 was less
than £1m (2025: less than £1m).
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Pension risk
Overview Pension risk is the risk caused by our statutory contractual or other liabilities with respect to a pension scheme (whether set up for our employees or those of a related company or otherwise). It also refers to the risk that we will need to make payments or other contributions with respect to a pension scheme due to some other reason. Pension risk management In H1-26, there were no significant changes in the way we manage pension risk as described in the 2025 Annual Report. Pension risk review In this section, we give an update on key movements in pension risk profile in H1-26. | Key metrics Funding Deficit at Risk was £630m (2025: £760m) Funded defined benefit pension scheme accounting surplus was £560m (2025: £524m) |
PENSION RISK REVIEW
30 June 2026 compared to 31 December 2025
The underlying level of risk in the Scheme reduced in H1-26, mainly due to the purchase of a buy-in contract covering a subset of Scheme members and the
continued disposal of illiquid assets. The acquisition of TSB in H1-26 did not significantly impact pension risk, as TSB only provides defined contribution pension
arrangements for its staff and does not sponsor a defined benefit pension scheme.
Risk monitoring and measurement
Our main focus is to ensure the Scheme achieves the right balance between risk and reward whilst minimising the impact on our capital and financial position. At
30 June 2026, the Funding Deficit at Risk decreased to £630m (2025: £760m), mainly due to the reduction in risk from the buy-in contract purchase and
disposals of illiquid assets noted above.
The impact from variations in the IAS 19 position on CET1 capital was not significant in H1-26. For more on the impact of our defined benefit schemes on capital,
see the 'Capital risk' section.
Accounting position
The accounting position improved in H1-26. The Scheme sections in surplus had an aggregate surplus of £560m at 30 June 2026 (2025: £524m) with no
sections in deficit (2025: none). Unfunded liabilities were £21m at 30 June 2026 (2025: £22m). On the funding basis agreed with the Trustee, the Scheme had an
overall surplus, with individual sections either fully funded or close to fully funded.
For more on our pension schemes, including the asset allocation and our accounting assumptions, see Note 22 to the Condensed Consolidated Interim Financial
Statements.
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Strategic and business risk
Overview Strategic and business risk is the risk of loss or underperformance against planned objectives; damage arising from strategic decisions or their poor implementation that impact the long-term interests of our key stakeholders; or from an inability to adapt to external developments. Strategic and business risk management In H1-26, there were no significant changes in the way we manage strategic and business risk, as described in the 2025 Annual Report, including as a result of the TSB acquisition. Strategic and business risk review In this section, we provide an update on key movements in strategic and business risk in H1-26. |
STRATEGIC AND BUSINESS RISK REVIEW
30 June 2026 compared to 31 December 2025
In H1-26, integration planning and execution for TSB remained a key area of management focus and we are managing the associated risks through dedicated
governance, oversight and risk management arrangements. Regulatory approvals for change of control were received in April 2026, enabling us to progress
towards the business transfer and Part VII process, while also planning for future migration activity following receipt of the required court approvals. A governance
and risk management framework has been in place throughout the programme, including regular reporting of programme risks to the Board and independent
oversight. An Executive Committee Integration Director has been appointed with overall accountability for the programme. Principal integration risks have been
identified and are being managed through dedicated governance structures, ongoing monitoring, defined accountability and targeted mitigation actions. Delivery
of the remaining phases of integration remains a priority.
Alongside integration activity, we continued to deliver our strategic commercial and operational transformation agenda. Our focus remains on growing our
franchise, deepening customer relationships and investing in technology and digital capabilities to enhance customer experience and deliver value. During the
period, we introduced new products and services, including our My First Mortgage proposition, the relaunch of Santander Select, and the Santander Rewards
Credit Card, which has no monthly fee and offers customers 3% cash back on everyday travel, eating out and takeaways. We further enhanced our mobile app
for our 7.4 million digital customers and continued to optimise our branch network to support our customers across channels.
The UK banking market continued to evolve rapidly, with ongoing competitive pressure from incumbent banks, building societies and digital banks. Sector
consolidation also remained a feature of the market. With this market context, delivery of our transformation programme remained a focus to support
competitiveness, improve efficiency and deliver value for customers and shareholders.
Against a backdrop of ongoing geopolitical and economic uncertainty, our priority remained supporting customers and delivering good customer outcomes. We
continued proactive engagement with customers experiencing financial difficulty and continued to support industry initiatives such as the UK Mortgage Charter.
We also expanded customer support capabilities through initiatives such as the My Money Vibe pilot, providing personalised guidance and tools to help
customers manage their finances.
The regulatory agenda remained demanding during the period, with continued focus on governance, model risk, outsourcing, data and financial resilience, in
addition to oversight associated with the TSB acquisition. We maintained our commitment to regulatory compliance and effective risk management across our
activities.
We remain focused on supporting customer needs, improving efficiency and building a responsible and sustainable business. These priorities support our ability
to respond to evolving customer expectations, manage strategic and business risks effectively and deliver sustainable long-term returns.
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Reputational risk
Overview Reputational risk is the risk of damage to the way our reputation and brand are perceived by the public, clients, government, colleagues, investors, or any other interested party. Reputational risk management In H1-26, there were no significant changes in the way we manage reputational risk as described in the 2025 Annual Report, including as a result of the TSB acquisition. Reputational risk review In this section, we provide an update on key movements in reputational risk in H1-26. |
REPUTATIONAL RISK REVIEW
30 June 2026 compared to 31 December 2025
We completed the acquisition of TSB on 30 April 2026. The transaction represents a significant investment in the UK and supports greater competition in the
retail banking market. Media and stakeholder interest focused on the future of branches, jobs and the brand, which will remain important areas of focus as
integration progresses. We remain committed to maintaining high service standards for customers and supporting colleagues through the transition.
In H1-26, we announced further branch closures. This generated media coverage and questions from MPs. We engaged with media and political stakeholders to
explain our commitment to a right-sized branch network and our Work Cafés. We also highlighted the support available through banking hubs, Community
Bankers and our digital, telephone and chat services. In July 2026, we announced that we do not intend to close any additional Santander or TSB branches
before 2028 at the earliest, alongside our continued commitment to invest in modernising our network and to introduce new Work Cafés.
We announced an additional provision for motor finance in Q1-26. The subsequent launch and legal challenge of the FCA compensation scheme created
uncertainty about the timing and potential impact of any redress arrangements. The issue continued to attract media, political and customer attention.
Developments in the Middle East increased cost of living concerns for customers and businesses. We responded through proactive customer outreach and
engagement with media and political stakeholders to explain the support available.
We continued to engage with government on key policy issues, including ring-fencing, capital requirements and Financial Ombudsman Service reform.
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Operational risk
Overview Operational risk is the risk of loss due to inadequate or failed internal processes, people and systems, or external events. Operational risk management In H1-26, there were no significant changes in the way we manage operational risk as described in the 2025 Annual Report, including as a result of the TSB acquisition. Operational risk review In this section, we give an update on key movements in operational risk in H1-26. |
OPERATIONAL RISK REVIEW
30 June 2026 compared to 31 December 2025
Operational risk event losses
In H1-26, we made an additional provision charge of £179m for historical motor finance commission payments. Excluding fraud losses, no individual operational
risk event loss exceeded the £10m materiality threshold. We continued to maintain provisions for customer remediation programmes and their associated costs.
Operational Resilience
We continued to mature our frameworks and capabilities, with the Board Self-Assessment in Q1-26 supporting our assessment of compliance with operational
resilience requirements. We also progressed our assessment of our Important Business Services resilience through severe but plausible disruption scenarios,
including successful cyber-attack and loss of third-party scenarios. We designed these scenarios to test if our contingency and recovery strategies are effective in
minimising harm to customers, avoiding risks to the safety and soundness of the firm and supporting the orderly functioning and stability of UK financial markets.
We continued to invest in strategic programmes to further strengthen our resilience across our IT estate and key suppliers. The acquisition of TSB will increase
operational complexity during the transition period as we manage two environments, in relation to technology, suppliers, data and migration activity. We are
managing these risks through dedicated integration governance, resilience planning, testing and targeted mitigation activity. Our focus – now, during and post
migration – will be on maintaining Important Business Services, within impact tolerances.
Cybersecurity
We continued to strengthen our capabilities through ongoing investment in threat detection, security monitoring, vulnerability management and cyber resilience.
There were no material cyber or information security incidents in the period. The external cyber threat landscape materially increased, driven by geopolitical
developments and the emergence of Frontier AI, which materially accelerated the identification and exploitation of vulnerabilities. We continue to adapt our
approach to address these emerging threats, leveraging Frontier AI capabilities. The acquisition of TSB increased the scale and complexity of our environment
and our security risk profile. We remain focused on reducing inherited legacy technology risks via timely integration as well as dedicated risk mitigation activities.
Data Management
In H1-26, we continued to strengthen data governance and progressed our multi-year data remediation programme. Our focus remained on improving critical
data governance and strengthening end-to-end controls. We also continued to evolve our approach to support strategic change, including TSB data migration.
IT
Over the past three years, we have made significant progress in strengthening the technology risk profile through targeted remediation in the estate and
improvements to the control environment.
Legal
Our legal risk profile remained heightened, reflecting the number and value of legal risks we manage. The Santander UK group's exposure to legal risk is mainly
driven by the material litigation matters in Note 21 - Provisions, and Note 24 - Contingent Liabilities and Commitments. Elements of a judgment in the large-scale
and complex PPI related litigation brought by AXA that were handed down by the High Court on 25 July 2025 are the subject of an appeal and cross-appeal to
the Court of Appeal. The appeal and cross-appeal were heard in July 2026 with a decision expected in H2 2026. Following the Supreme Court judgment in the
Hopcraft, Wrench and Johnson cases related to motor finance commission litigation in August 2025, the FCA published in March 2026 its rules and guidance for
redress schemes under Section 404 of the Financial Services and Markets Act 2000 based on Section 140A Consumer Credit Act 1974, which are subject to
legal challenges to the Upper Tribunal by three lenders and a consumer representative. The decision of the Court of Appeal in the Angel vs. Black Horse Limited
case may have implications for the resolution on motor finance commission claims through the Courts rather than a FCA redress scheme. The impact and
implications of these decisions for Santander UK are outlined in Notes 21 and 24. We continued to respond to developments in relation to the German criminal
tax investigation relating to historical dividend tax arbitrage transactions. We continued to monitor and manage our legal risk in relation to thematic Court actions
and FOS complaints related to fraud, mortgages and unaffordable lending, including a successful judicial review of FOS decision on the scope of its jurisdiction to
consider and award redress in relation to alleged acts and omissions more than 6 years prior to the date of the complaint. We have managed renewed litigation
threats relating to historical PPI practices / Section140A CCA breaches, with a resurgence of individual pre-action letters, and three omnibus claims (relating to
c.40,000 customer accounts) being issued and served. Having affirmed that the omnibus procedure could be utilised (with caveats) to pursue Section140A CCA
claims, the aforementioned Angel vs Black Horse Limited judgment is likely to lead to increased omnibus claim risk as we move forward. The legal and regulatory
environment in which we operate is evolving and we are evaluating and responding to these developments, including the Employment Rights Act 2025, the
Crime and Policing Act 2026, the Money Laundering and Terrorist Financing (Amendment) Regulations 2026 and proposed reforms to the Consumer Credit Act
1974, the Financial Ombudsman Scheme and consumer redress schemes, the functions of the PRA and FCA (including the proposed abolition of the Payment
Services Regulator) and the ring-fencing regime under the Financial Services and Markets Bill.
Third party suppliers
We continue to expand our outsourcing strategy and reliance on third parties for a range of goods and services, provided by Banco Santander and other key
suppliers. In H1-26, we have further evolved our third party risk management maturity and resilience to monitor and respond to fast evolving risks as a result of
geopolitical, country, supply chain, fourth parties and Frontier AI considerations for our material services and key suppliers. The TSB acquisition is not expected to
materially increase our supplier risk profile as integration will be based on a switch from TSB suppliers to existing Santander UK suppliers.
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Transformation and change
In H1-26, our primary focus was on ensuring TSB is integrated safely and sustainably, with minimal impacts to customers. We also continued to simplify, digitise
processes and customer journeys, reduce costs, extend internal capabilities and ensure a resilient operating model as part of our ongoing transformation. The
impact on our risk profile underpins our strategic transformation and investment decisions.
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Economic crime risk
Overview Economic crime risk consists of Financial Crime (FC) risk and Fraud risk. FC risk is the risk that we are used to further FC, including money laundering, terrorist financing, sanctions evasion, bribery and corruption, and the facilitation of tax evasion. Fraud risk is the risk associated with attempted or successful fraud being committed against Santander UK, a customer or a third party. Economic crime risk management In H1-26, there were no significant changes in the way we manage economic crime risk as described in the 2025 Annual Report, including as a result of the TSB acquisition. Economic crime risk review In this section, we give an update on key developments in economic crime risk in H1-26. |
ECONOMIC CRIME RISK REVIEW
30 June 2026 compared to 31 December 2025
Financial Crime
We take our FC responsibilities extremely seriously. Protecting the communities we serve from the social and economic impacts of FC remains a top priority. The
FC landscape continues to be complex, with evolving regulatory and legal requirements, geopolitical factors and ever-changing criminal methods influencing the
risks we face. In H1-26 we:
–Continued maturing our FC oversight capabilities and our FC Centre of Excellence operations, to further integrate FC risk management operations across the
business.
–Maintained the Board and senior management's focus on the management of FC risk as one of our top priorities, including through the Executive Economic
Crime Committee.
–Updated our FC policies and standards to reflect the latest external requirements and best practice, and to align with the Banco Santander group policy
requirements. We continue to support business areas with implementation guidance.
–Enhanced our screening systems and controls, improving control coverage and accelerating risk mitigation.
–Continued to enhance and digitise customer due diligence processes for new and existing customers.
–Shared best practice with the wider Banco Santander group to collaborate and explore opportunities to leverage platforms and technologies.
–Played a key role in a wide variety of industry association hosted forums, actively engaging with our peers on best practice, benchmarking and other efforts
that boost our FC compliance programme.
–Continued to play an active role across the public-private partnerships, working closely with government, trade bodies and industry on issues that may impact
our FC compliance capabilities. This included extensive work on ongoing HM Treasury consultations on the Money Laundering Regulations and AML
Supervisory Reform, and various Financial Action Task Force consultations.
–Took part in external engagements in relation to international anti-corruption and ongoing government initiatives including the upcoming Anti-Corruption
Strategy 2025 and the 2026 Countering Illicit Finance Summit, and operational initiatives focused on Santander UK's day-to-day anti-fraud prevention efforts.
–Continued engaging externally on critical strategic public sector documents, such as the ongoing implementation of the Economic Crime Plan 2 and Fraud
Strategy, and ongoing work on system prioritisation and an economic crime data strategy.
Fraud
Fraud risk losses remained a material driver of our operational risk losses, in line with the wider UK financial services industry. Social engineering techniques
used by fraudsters are a significant threat to customers and are outside of our direct control. We focus on preventative measures in response to increasing fraud
attacks and protecting customers from harm. In H1-26 we:
–Enhanced our preventative capabilities and our controls further, including new tools to identify fraud in our digital channels using behaviour biometrics.
–Continued to see that Debit and Credit Card Fraud and APP fraud remained our most significant fraud types, now dominated by social engineering.
–Maintained focus on customer education, with a key part of our strategy including presenting customers with tailored questions and warnings specific to their
payment journey.
–Continued with our quarterly 'ScamTracker' for media and local government usage to highlight the scale and nature of fraud currently impacting the UK.
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Model risk
Overview Model risk is the risk that the predictions from models may be inaccurate, causing sub-optimal decisions to be made; or that a model may be used inappropriately. These potential adverse consequences can lead to reputational damage, regulatory non-compliance, a deterioration in prudential position, or financial losses. Model risk management In H1-26, there were no significant changes in the way we manage model risk as described in the 2025 Annual Report, including as a result of the TSB acquisition. Model risk review In this section, we give an update on key developments in model risk in H1-26. |
Following the acquisition of TSB, model risk management continues to operate under separate governance arrangements, with alignment activities planned
during H2-26.
MODEL RISK REVIEW
30 June 2026 compared to 31 December 2025
We maintained a risk-based approach to management and control, including for TSB, focusing on model monitoring and independent reviews of our more
material models, such as those for credit losses and those with defined regulatory standards.
We continued work to fully embed requirements introduced by PRA Supervisory Statement SS1/23 that increased focus on model risk management across the
industry. During the period, we introduced an updated Model Risk Appetite framework, approved by the Board, to support oversight of model risk and provide a
clearer view of the quality and risk profile of material models underpinning financial reporting. Reporting under the revised framework will commence in H2-26.
We continued to develop our regulatory models in line with supervisory expectations, focusing on capital adequacy to reflect the most recent and accurate data.
We also progressed development of new impairment models for the unsecured retail portfolio to further embed long standing adjustments to the ECL into
models. The post-model adjustment framework continues to be embedded, including independent review where applicable, of adjustments made to ECL to
mitigate against weaknesses and limitations. Following the acquisition of TSB, activities commenced during the period to support the future integration and
alignment of models, post-model adjustments and model risk management requirements, with this expected to continue during H2-26.
As part of our ESG commitment and the overall industry focus, we continued to evolve our risk models that consider climate change risk factors with longer
forecast horizons. We increased internal climate change risk expertise to reduce reliance on external providers to future proof capabilities for future regulation.
As the use of AI tools is increasing in the industry, we continued to develop a robust control environment to support these tools, focused on the model risk
implications of AI use cases being introduced across the organisation.
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Compliance risk
Overview We manage the compliance risk types in one framework. Compliance risk also includes data privacy and people risk. Compliance risk management In H1-26, there were no significant changes in the way we manage compliance risk as described in the 2025 Annual Report, including as a result of the TSB acquisition. Compliance risk review In this section, we give an update on key developments in compliance risk in H1-26. |
Following the TSB acquisition, we are aligning our Compliance Framework, policies and processes to support integration activities. We are conducting customer
impact assessments throughout the integration to identify and address potential customer impacts and to help ensure good customer outcomes.
In addition, as part of the annual review of the Risk Framework in January 2026, People risk was reclassified as part of Operational risk and, going forward, will
be reported in the Operational risk section.
COMPLIANCE RISK REVIEW
30 June 2026 compared to 31 December 2025
Our customers remained at the centre of our culture and purpose. We continued to ensure our risk tools and processes are customer focused and we monitor
and regularly review customer experiences to ensure they are receiving good outcomes:
Conduct and Consumer Duty
We remain committed to delivering products and services that meet customer needs and our Consumer Duty obligations, with effective oversight of the value,
service and outcomes our customers receive, including vulnerable customers. In H1-26, we enhanced our products and services across business and support
areas to ensure we continue to deliver good outcomes. These include improving, simplifying and digitising customer journeys, and adjusting fees and charges to
continue offering fair value to our customers.
Following the TSB Consumer Duty strategic review, there is now greater clarity on customer journeys and outcomes, supported by more focused management
reporting, a more consistent approach to identifying potential and actual harm, and a clearer understanding of where further improvement is required.
Following publication of the FCA historical motor finance redress scheme and legal challenges raised in H1-26, we continue to prepare for a range of possible
outcomes, with a focus on robust operational and governance frameworks to support customers. We remain actively engaged with the FCA on developments.
Customer and client protection
We continued to enhance our control environment through a proactive, customer-centric transformation strategy that aligns services with evolving customer
needs and behaviours:
–We announced further changes as part of our Branch transformation programme, which reflect how customers bank with us. Through these changes, we
continued to ensure customers receive the right support.
–We continued to invest in customer communication channels, including our branch network, Work Cafés and community bankers, digital chat and telephone
banking services, alongside investment in our communications issuance platform.
–We continued to support regulators, government and consumers in maintaining the UK's free access to cash network, including through an extensive national
shared banking hub network.
–We continued to proactively contact customers who may be at risk of experiencing early signs of financial stress, to try and help them avoid longer-term
financial difficulty by referring them to internal and external sources of assistance, alongside ongoing customer engagement and support plans.
–We further enhanced our customer outcome monitoring and customer testing to strengthen our ability to identify and report any areas of potential harm, poor
outcomes or customer experiences. We ensured that we make timely decisions and actions to address any potential harm.
Compliance standards
–We continued to maintain open and regular dialogue with regulators and continued to engage with policy makers to ensure the UK regulatory regime enabled
us to better support our customers and deliver economic growth. In H1-26, topics we engaged with regulators on included ring-fencing, UK capital
requirements, targeted support and reform of mortgage rules.
–We are committed to adhering to our regulatory requirements, including maintaining systems and controls. Where we identify instances of non-compliance, we
take timely action to remediate.
Data privacy and protection
We remain committed to protecting the personal data we collect and use, while respecting individuals data protection rights. Our policies, processes and people
comply with the applicable data protection laws and regulations, and we monitor both the regulatory landscape and our policies and processes to ensure they
remain effective and aligned with evolving expectations. We continued to improve our risk profile and strengthen our control environment, governance and data
protection practices. As we progress the integration of TSB, we will work to support a consistent approach to data privacy and protection across Santander UK.
People
People risk remains a focus, reflecting the scale and complexity of organisational transformation, including changes to our site and office attendance strategy,
and the start of activity to integrate TSB into Santander UK. These changes increase the importance of maintaining colleague engagement, leadership capacity,
critical skills, effective succession planning, and operational continuity. People risk will continue to be actively managed as transformation and integration activity
progresses.
Accounting position
For more on our provisions, see Note 21 to the Condensed Consolidated Interim Financial Statements. For more on our contingent liabilities, see Note 24 to the
Condensed Consolidated Interim Financial Statements.
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Financial statements | ||||
Contents | ||||
Primary financial statements | 46 | |||
Condensed Consolidated Income Statement | 46 | |||
Condensed Consolidated Statement of Comprehensive Income | 47 | |||
Condensed Consolidated Balance Sheet | 48 | |||
Condensed Consolidated Cash Flow Statement | 49 | |||
Condensed Consolidated Statement of Changes in Equity | 50 | |||
Notes to the financial statements | 51 | |||
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Condensed Consolidated Income Statement (unaudited)
For the half year to
30 June 2026 | 30 June 2025 | ||
Notes | £m | £m | |
Interest and similar income | |||
Interest expense and similar charges | ( | ( | |
Net interest income | |||
Fee and commission income | |||
Fee and commission expense | ( | ( | |
Net fee and commission income | |||
Other operating income | |||
Regulatory fees and levies1 | ( | ( | |
Net operating income1 | |||
Operating expenses before credit impairment charges, restructuring and specific provisions1 | 3 | ( | ( |
Credit impairment charges | 4 | ( | ( |
Restructuring and specific provisions1 | 21 | ( | ( |
Total credit impairment charges, restructuring and specific provisions | 4 | ( | ( |
Profit before tax | |||
Tax on profit | 5 | ( | ( |
Profit after tax |
The accompanying Notes to the Financial Statements form an integral part of these Condensed Consolidated Interim Financial Statements.
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Condensed Consolidated Statement of Comprehensive Income (unaudited)
For the half year to
30 June 2026 | 30 June 2025 | ||
Notes | £m | £m | |
Profit after tax | |||
Other comprehensive (expense)/income that may be reclassified to profit or loss subsequently: | |||
Movement in fair value reserve (debt instruments): | |||
- Change in fair value | ( | ||
- Income statement transfers | ( | ||
- Taxation | ( | ( | |
0 | |||
Cash flow hedges: | |||
- Effective portion of changes in fair value | ( | ( | |
- Income statement transfers | |||
- Taxation | ( | ||
0 | ( | ||
Cost of hedging: | |||
- Cost of hedging gains | |||
Net other comprehensive (expense)/income that may be reclassified to profit or loss subsequently | ( | ||
Other comprehensive (expense)/income that will not be reclassified to profit or loss subsequently: | |||
Pension remeasurement: | |||
- Remeasurements of the net defined benefit (asset)/liability | 22 | ( | |
- Taxation | ( | ||
0 | ( | ||
Own credit adjustment: | |||
- Change in fair value | ( | ||
- Taxation | ( | ||
0 | ( | ||
Net other comprehensive (expense)/income that will not be reclassified to profit or loss subsequently | ( | ||
Total other comprehensive (expense)/income net of tax | ( | ||
Total comprehensive income |
The accompanying Notes to the Financial Statements form an integral part of these Condensed Consolidated Interim Financial Statements.
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Condensed Consolidated Balance Sheet (unaudited)
At 30 June 2026
30 June 2026 | 31 December 2025 | ||
Notes | £m | £m | |
Assets | |||
Cash and balances at central banks | |||
Derivative financial instruments | 7 | ||
Other financial assets at fair value through profit or loss | 8 | ||
Loans and advances to banks | |||
Loans and advances to customers | 9 | ||
Reverse repurchase agreements - non-trading | 11 | ||
Other financial assets at amortised cost | 12 | ||
Macro hedge of interest rate risk | ( | ( | |
Financial assets at fair value through other comprehensive income | |||
Interests in other entities | |||
Intangible assets | 14 | ||
Property, plant and equipment | 15 | ||
Current tax assets | |||
Retirement benefit assets | 22 | ||
Other assets | |||
Assets held for sale | |||
Total assets | |||
Liabilities | |||
Deposits by banks | 16 | ||
Deposits by customers | 17 | ||
Repurchase agreements - non-trading | 18 | ||
Derivative financial instruments | 7 | ||
Other financial liabilities at fair value through profit or loss | 19 | ||
Debt securities in issue | 20 | ||
Macro hedge of interest rate risk | |||
Other liabilities | |||
Provisions | 21 | ||
Deferred tax liabilities | |||
Retirement benefit obligations | 22 | ||
Subordinated liabilities | 23 | ||
Total liabilities | |||
Equity | |||
Share capital | |||
Share premium | |||
Other equity instruments | 25 | ||
Other reserves | ( | ||
Retained earnings | |||
Total equity | |||
Total liabilities and equity |
The accompanying Notes to the Financial Statements form an integral part of these Condensed Consolidated Interim Financial Statements.
The Financial Statements were approved and authorised for issue by the Board on 6 August 2026 and signed on its behalf by:
Mahesh Aditya | Angel Santodomingo |
Chief Executive Officer | Chief Financial Officer |
Company Registered Number: 02294747 |
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Condensed Consolidated Cash Flow Statement (unaudited)
For the half year to
30 June 2026 | 30 June 2025 | ||
Notes | £m | £m | |
Cash flows from operating activities | |||
Profit before tax | |||
Adjustments for: | |||
Non-cash items included in profit | |||
Change in operating assets | ( | ||
Change in operating liabilities | ( | ( | |
Corporation taxes paid | ( | ( | |
Effects of exchange rate differences | ( | ( | |
Net cash flows from operating activities | ( | ||
Cash flows from investing activities | |||
Purchase of property, plant and equipment and intangible assets | ( | ( | |
Proceeds from sale of property, plant and equipment and intangible assets | |||
Purchase of financial assets at amortised cost and financial assets at FVOCI | ( | ( | |
Proceeds from sale and redemption of financial assets at amortised cost and financial assets at FVOCI | |||
Net cash flow from acquisition of TSB Banking Group plc | ( | ||
Net cash flows from investing activities | ( | ||
Cash flows from financing activities | |||
Issue of ordinary share capital | |||
Issue of other equity instruments | |||
Issue of debt securities and subordinated notes | |||
Issuance costs of debt securities and subordinated notes | ( | ( | |
Repayment of debt securities and subordinated notes | ( | ( | |
Repurchase of other equity instruments | ( | ( | |
Dividends paid on preference shares and other equity instruments | ( | ( | |
Principal elements of lease payments | ( | ( | |
Net cash flows from financing activities | |||
Change in cash and cash equivalents | |||
Cash and cash equivalents at beginning of the year | |||
Effects of exchange rate changes on cash and cash equivalents | ( | ||
Cash and cash equivalents at the end of the period | |||
Cash and cash equivalents consist of: | |||
Cash and balances at central banks | |||
Less: restricted balances | ( | ( | |
Other cash equivalents: Loans and advances to banks - non-trading | |||
Cash and cash equivalents at the end of the period |
The accompanying Notes to the Financial Statements form an integral part of these Condensed Consolidated Interim Financial Statements.
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Condensed Consolidated Statement of Changes in Equity (unaudited)
For the half year to
Other reserves | ||||||||||
Share capital | Share premium | Other equity instruments | Capital contribution reserve | Fair value | Cash flow hedging | Cost of hedging | Currency translation | Retained earnings | ||
Total | ||||||||||
£m | £m | £m | £m | £m | £m | £m | £m | £m | £m | |
At 1 January 2026 | ( | ( | ||||||||
Profit after tax | – | – | – | – | – | – | – | – | ||
Other comprehensive income/(expense), net of tax: | ||||||||||
- Fair value reserve (debt instruments) | – | – | – | – | – | – | – | – | ||
- Cash flow hedges | – | – | – | – | – | ( | – | – | – | ( |
- Cost of hedging | – | – | – | – | – | – | – | – | ||
- Pension remeasurement | – | – | – | – | – | – | – | – | ( | ( |
- Own credit adjustment | – | – | – | – | – | – | – | – | ( | ( |
Total other comprehensive income/(expense) | – | – | – | – | ( | – | ( | ( | ||
Total comprehensive income/(expense) | – | – | – | – | ( | – | ||||
Issue of ordinary shares | – | – | – | – | – | – | – | – | ||
Issue of other equity instruments | – | – | – | – | – | – | – | – | ||
Repurchase of other equity instruments | – | – | ( | – | – | – | – | – | – | ( |
Dividends on preference shares and other equity instruments | – | – | – | – | – | – | – | – | ( | ( |
At 30 June 2026 | ( | ( | ||||||||
At 1 January 2025 | ( | ( | ||||||||
Profit after tax | – | – | – | – | – | – | – | – | ||
Other comprehensive income, net of tax: | ||||||||||
- Fair value reserve (debt instruments) | – | – | – | – | – | – | – | – | ||
- Cash flow hedges | – | – | – | – | – | – | – | – | ||
- Pension remeasurement | – | – | – | – | – | – | – | – | ||
- Own credit adjustment | – | – | – | – | – | – | – | – | ||
Total other comprehensive income | – | – | – | – | – | – | ||||
Total comprehensive income | – | – | – | – | – | – | ||||
Issue of other equity instruments | – | – | – | – | – | – | – | – | ||
Repurchase of other equity instruments | – | – | ( | – | – | – | – | – | – | ( |
Dividends on preference shares and other equity instruments | – | – | – | – | – | – | – | – | ( | ( |
At 30 June 2025 | ( | |||||||||
The accompanying Notes to the Financial Statements form an integral part of these Condensed Consolidated Interim Financial Statements.
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section 434 of the UK Companies Act 2006. Santander UK plc is a public company, limited by shares and incorporated and registered in England and Wales
having a registered office at 2 Triton Square, Regent’s Place, London, NW1 3AN. Statutory accounts for the year ended 31 December 2025 have been delivered
to the Registrar of Companies.
The Condensed Consolidated Interim Financial Statements reflect all adjustments that, in the opinion of management, are necessary for a fair statement of the
results of operations for the interim period. All such adjustments to the financial information are of a normal, recurring nature. Because the results from common
banking activities are so closely related and responsive to changes in market conditions, the results for any interim period are not necessarily indicative of the
results that can be expected for the year.
The Condensed Consolidated Interim Financial Statements have been prepared in accordance with International Accounting Standard IAS 34 ‘Interim Financial
Reporting' as adopted by the UK and IAS 34 ‘Interim Financial Reporting' as issued by the International Accounting Standards Board (IASB), and the Disclosure
Guidance and Transparency Rules sourcebook of the UK's Financial Conduct Authority (FCA). They do not include all the information and disclosures normally
required for full annual financial statements and should be read in conjunction with the Consolidated Financial Statements of Santander UK plc (the Company)
and its subsidiaries (collectively Santander UK or the Santander UK group) for the year ended 31 December 2025 which were prepared in accordance with UK-
adopted International Accounting Standards (IAS). Those consolidated financial statements were also prepared in accordance with International Financial
Reporting Standards (IFRS) as issued by the IASB, including interpretations issued by the IFRS Interpretations Committee, as there were no applicable
differences from IFRS as issued by the IASB for the periods presented.
The same accounting policies and methods of computation are followed in these Condensed Consolidated Interim Financial Statements as were applied in the
Santander UK group’s 2025 Annual Report except for the voluntary change in accounting policy, the adoption of the amendments to IFRS 9 as noted in the
following paragraphs and updates noted in this report, which have arisen as a result of the acquisition of TSB Banking Group and its subsidiaries (TSB) as set out
in Note 29. TSB accounting policies have been aligned to the Santander UK accounting policies with no material impact on the income statement or to TSB
opening balance sheet.
In Q1-26, Santander UK voluntarily changed its accounting policy to reclassify certain costs previously included in the ‘Provisions for other liabilities and charges’
line in the Consolidated Income Statement. Regulatory levies and fees are now classified in ‘Non-interest income’, while operational risk and other related costs
have been reclassified to ‘Operating expenses’. Restructuring costs and/or specific, more significant or one-off provisions have not been reclassified so as a
result, ‘Provisions for other liabilities and charges’ has been renamed to ‘Restructuring and specific provisions’, and ‘Total operating income’ has been renamed
as ‘Net operating income’. This change provides reliable and more relevant information to users of the financial statements as it aligns our presentation with our
ultimate parent, Banco Santander.
The change in accounting policy had no effect on any other primary financial statements, income statement metrics (except the CIR), key indicators, liquidity
ratios, or maturity and offsetting disclosures. Comparative periods have also been reclassified.
Condensed Consolidated Income Statement | As originally published | Change | Reclassified | |
£m | £m | £m | ||
Interest and similar income | ||||
Interest expense and similar charges | ( | ( | ||
Net interest income | ||||
Fee and commission income | ||||
Fee and commission expense | ( | ( | ||
Net fee and commission income | ||||
Other operating income | ||||
Regulatory fees and levies | ( | ( | ||
Net operating income | ( | |||
Operating expenses before credit impairment charges, restructuring and specific provisions | ( | ( | ( | |
Credit impairment charges | ( | ( | ||
Restructuring and specific provisions | ( | ( | ||
Total credit impairment charges, restructuring and specific provisions | ( | ( | ||
Profit before tax | ||||
Tax on profit | ( | ( | ||
Profit after tax |
Certain disclosures have been presented in the Risk review in the Half Yearly Financial Report 2026, rather than in the Notes to the Condensed Consolidated
Interim Financial Statements. These tables are as follows:
–Credit risk: Sensitivity of ECL allowance to economic scenarios and weights
–Credit risk: Movement in total exposures and the corresponding ECL in the Santander UK group level section
–Capital risk: Regulatory capital resources
–Market risk: NII sensitivity.
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Amendments to the Classification and Measurement of Financial Instruments (Amendments to IFRS 9 ‘Financial Instruments’ and IFRS 7
‘Financial Instruments: Disclosures’)
The Santander UK group has applied the following:
–Effective 1 January 2026, Santander UK has adopted the Amendments to IFRS 9 ‘Financial Instruments’ and IFRS 7 ‘Financial Instruments: Disclosures’ -
which sets out changes to settling financial liabilities using an electronic payment system, assessing contractual cash flow characteristics of financial assets
including those with Environmental, Social and Governance-linked features and requiring additional disclosures for certain financial instruments. The
amendments did not have a material impact on Santander UK's operations or financial statements.
The IASB issued the following new accounting standard which is not yet mandatory for reporting periods commencing 1 January 2026:
–Effective 1 January 2027: IFRS 18 ‘Presentation and Disclosure in Financial Statements’ – the new standard will replace IAS 1 ‘Presentation of Financial
Statements’ and introduces changes to the categories for classifying income and expenses and subtotals presented in the income statement and new or
amended disclosures in respect of management-defined performance measures and specified expenses by nature. IFRS 18 was endorsed for use in the UK
on 10 December 2025. The Santander UK group has chosen not to early adopt the new standard.
The Santander UK group is assessing the new accounting standard to determine its potential impacts on the financial statements when it becomes effective.
In light of geopolitical and economic uncertainty, the Directors updated their going concern assessment in preparing these Condensed Consolidated Interim
Financial Statements. In making their going concern assessment, the Directors considered a wide range of information that included Santander UK's long term
business and strategic plans, forecasts and projections, estimated capital, funding and liquidity requirements, contingent liabilities and the reasonably possible
changes in trading performance arising from potential economic, market and product developments.
After making enquiries, the Directors have a reasonable expectation that Santander UK has adequate resources to continue in operational existence for at least
twelve months from the date of this report and, therefore, having reassessed the principal risks and uncertainties, the Directors consider it appropriate for the
Condensed Consolidated Interim Financial Statements to be prepared on a going concern basis.
The preparation of Santander UK's Condensed Consolidated Financial Statements in accordance with IAS 34 requires management to make judgements and
assumptions in applying the accounting policies that affect the reported amounts of assets, liabilities, income and expenses. Due to the inherent uncertainty in
making estimates, actual results reported in future periods may be based on amounts which differ from those estimates. Estimates, judgements and assumptions
are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable
under the circumstances.
Management has considered the impact of developments in principal risks and uncertainties, as set out in the Risk review, on critical judgements and accounting
estimates.
Consolidated Interim Financial Statements (key judgements) and the key sources of estimation uncertainty that may have a significant risk of causing a material
adjustment to the carrying amount of assets and liabilities within the next financial year (key estimates), which together are considered critical to Santander UK's
results and financial position, are as follows:
and estimates of market inputs used to determine the fair value of identifiable assets acquired and liabilities assumed. The fair values calculated resulted in the
recognition of £669 m goodwill on acquisition. See Note 29 for further information on the valuation approaches applied.
The application of the ECL impairment methodology for calculating credit impairment allowances is highly susceptible to change from period to period. The
methodology requires management to make judgemental assumptions in determining the estimates. Any significant difference between the estimated amounts
and actual amounts could have a material impact on the future financial results and financial condition.
Key judgements | –Establishing the criteria for a significant increase in credit risk (SICR) and, for corporate borrowers, internal credit risk rating |
–Determining the need for any judgemental adjustments | |
Key estimates | –Forward-looking multiple economic scenario assumptions |
–Probability weights assigned to multiple economic scenarios | |
–Expected future cash flows for individually assessed Stage 3 corporate exposures | |
–Collateral valuations of individually assessed Stage 3 corporate exposures |
For more on each of these key judgements and estimates, see 'Critical judgements and accounting estimates applied in calculating ECL' in the ‘Credit risk - credit
risk management’ section of the Risk review.
Sensitivity of ECL allowance
For detailed disclosures, see 'Sensitivity of ECL allowance' in the ‘Credit risk – credit risk management’ section of the Risk review.
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Key judgements | –Determining whether a present obligation exists |
–Determining the likely outcome of future legal decisions | |
Key estimates | –Probability, timing, nature and amount of any outflows that may arise from past events |
Included in Note 21 are amounts in respect of management’s best estimates of liability relating to: a legal dispute regarding the historical use of discretionary
commission arrangements by Santander Consumer (UK) plc and property and redundancy provisions relating to the transformation of our branch network. Note
24 provides disclosure relating to ongoing factual issues and reviews that could impact the timing and amount of any outflows. It includes disclosure relating to an
investigation in relation to the historical involvement of Santander UK plc, Santander Financial Services plc and Cater Allen International Limited (all subsidiaries
of Santander UK Group Holdings plc) in German dividend tax arbitrage transactions, legal disputes regarding allocation of responsibility for a specific Payment
Protection Insurance (PPI) portfolio of complaints, legal disputes relating to a portfolio of ex Northern Rock plc mortgage accounts, and the historical use of
discretionary commission arrangements by Santander Consumer (UK) plc.
These judgements are based on the specific facts available and often require specialist professional advice. There can be a wide range of possible outcomes
and uncertainties, particularly in relation to legal actions, and regulatory and customer remediation matters. As a result, on extremely rare occasions it is not
possible to make reliable estimates of the likelihood and amount of any potential outflows, or to calculate any resulting sensitivities. For more on each of these
key judgements and estimates, see Notes 21 and 24.
Key judgements | –Setting the criteria for constructing the corporate bond yield curve used to determine the discount rate |
–Determining the methodology for setting the inflation assumption | |
Key estimates | –Discount rate applied to future cash flows |
–Rate of price inflation | |
–Expected lifetime of the schemes' members | |
–Valuation of pension fund assets whose values are not based on market observable data |
For more on each of these key judgements and estimates, see Note 22.
Sensitivity of defined benefit pension scheme estimates
For detailed disclosures, see ‘Actuarial assumption sensitivities’ in Note 22.
The Scheme is invested in certain assets whose values are not based on market observable data, such as investments in private equity funds and property. Due
diligence has been conducted to confirm that the values obtained in respect of these assets represent fair value. Given the nature of these investments, we are
unable to prepare sensitivities on how their values could vary as market conditions or other variables change.
Key judgement: | –Determining the basis of goodwill impairment testing methodology, including the need for planning assumptions and internal capital allocations |
Key estimates: | –Forecast cash flows for cash generating units |
–Discount rates which factor in risk-free rates and applicable risk premiums | |
All of these variables are subject to fluctuations in external market rates and economic conditions beyond management’s control |
For more on each of these key judgements and estimates, see Note 14.
Sensitivity of goodwill
There have been no significant changes to the PFS cash-generating unit (CGU) goodwill sensitivities set out in the ‘Sensitivities of key assumptions in calculating
value in use (VIU)’ section in Note 19 to the Consolidated Financial Statements in the 2025 Annual Report, which did not include sensitivities relating to the TSB
CGU goodwill on the TSB acquisition as set out in Note 29.
Key judgement: | –Determining the valuation methodologies for assets and liabilities acquired |
Key estimates: | –Funding mix |
–Funding spread |
For more on each of these key judgements and estimates, see Note 29.
Sensitivity of the fair value measurement of acquired assets and liabilities
For detailed disclosures, see 'Sensitivity of fair value measurement of acquired assets and liabilities in Note 29.
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Santander UK’s principal activity is financial services, mainly in the UK. The business is managed and reported on the basis of four segments, which are strategic
business units that offer different products and services, have different customers and require different technology and marketing strategies. Geographical
information is not provided, as substantially all of Santander UK’s activities are in the UK. With effect from 30 April 2026, we acquired TSB as described in Note
29, which now forms part of our Retail & Business Banking segment.
In H2-25, management updated its internal transfer pricing arrangements. The segmental results for H1-25 have been updated to reflect those changes.
For the half year to
Retail & Business Banking | Consumer Finance | Corporate & Commercial Banking | Corporate Centre | Total | |
30 June 2026 | £m | £m | £m | £m | £m |
Net interest income | |||||
Non-interest income/(expense) | ( | ||||
Net operating income | |||||
Operating expenses before credit impairment charges, restructuring and specific provisions | ( | ( | ( | ( | ( |
Credit impairment (charges) | ( | ( | ( | ( | |
Restructuring and specific provisions | ( | ( | ( | ( | ( |
Total credit impairment charges, restructuring and specific provisions | ( | ( | ( | ( | ( |
Profit/(loss) before tax | ( | ( | |||
Revenue/(expense) from external customers | ( | ||||
Inter-segment (expense)/revenue | ( | ( | |||
Net operating income | |||||
Customer loans | |||||
Customer deposits |
30 June 2025 | £m | £m | £m | £m | £m |
Net interest income | |||||
Non-interest income/(expense) | ( | ||||
Net operating income/(expense) | ( | ||||
Operating expenses before credit impairment charges, restructuring and specific provisions | ( | ( | ( | ( | |
Credit impairment (charges) | ( | ( | ( | ( | |
Restructuring and specific provisions | ( | ( | ( | ( | |
Total credit impairment charges, restructuring and specific provisions | ( | ( | ( | ( | |
Profit/(loss) before tax | ( | ||||
Revenue/(expense) from external customers | ( | ||||
Inter-segment (expense)/revenue | ( | ( | |||
Net operating income/(expense) | ( | ||||
At 31 December 2025 | |||||
Customer loans | ( | ||||
Customer deposits |
Sheet. Customer balances exclude joint ventures, as they carry low credit risk and therefore have an immaterial ECL, Other items, mainly accrued interest that
we have not yet charged to the customer's account and cash collateral. It also shows the relationship between customer liabilities (see above) and Deposits by
customers as presented in the Condensed Consolidated Balance Sheet.
Net carrying amount | ||||
Assets | Liabilities | |||
30 June 2026 | 31 December 2025 | 30 June 2026 | 31 December 2025 | |
£m | £m | £m | £m | |
Customer balances (gross) | ||||
Loan loss allowance | ( | ( | – | – |
Customer balances (net) | ||||
Intercompany balances (including joint ventures) | ||||
Accrued interest | ||||
Other items | ( | ( | ||
Loans and advances to customers / Deposits by customers | ||||
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RESTRUCTURING AND SPECIFIC PROVISIONS
30 June 2026 | 30 June 2025 | |
£m | £m | |
Staff costs | ||
Operational losses (See Note 21) | ||
Other administration expenses | ||
Depreciation, amortisation and impairment | ||
In H1-26 Operating expenses were broadly flat as the inclusion of TSB's costs was offset by a reduction of £94 m due to ongoing simplification and automation.
Following the acquisition of TSB, Santander UK will continue to deliver historical awards under TSB share plans to TSB employees with the share-based
component of those awards being converted from Banco de Sabadell SA to Banco Santander SA shares.
For the half year to
30 June 2026 | 30 June 2025 | |
£m | £m | |
Loans and advances to customers | ||
Recoveries of loans and advances, net of collection costs | ||
Off-balance sheet credit exposures (See Note 21) | ( | |
0 |
In H1-26 and H1-25 there were no
financial assets at amortised cost and financial assets at FVOCI.
In H1-26 Credit impairment charges increased mainly due to the acquisition of TSB, including a day 1 charge of £62 m 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 recent events in the global economy.
For the half year to
30 June 2026 | 30 June 2025 | |
£m | £m | |
Profit before tax | ||
Tax calculated at the statutory rate of | ||
Bank surcharge on profits | ||
Non-deductible preference dividends paid | ||
Non-deductible UK Bank Levy | ||
Other non-deductible costs and non-taxable income | ||
Tax relief on dividends in respect of other equity instruments | ( | ( |
Adjustment to prior year provisions | ( | |
Tax on profit |
Interim period corporation tax is accrued based on the estimated average annual effective corporation tax for the year.
An interim dividend of £nil was declared on the Company’s ordinary shares in issue (H1-25: £nil ). There were no dividends paid.
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Fair value | Fair value | ||||||
Notional amount | Assets | Liabilities | Notional amount | Assets | Liabilities | ||
£m | £m | £m | £m | £m | £m | ||
Derivatives held for trading: | |||||||
Exchange rate contracts | |||||||
Interest rate contracts | |||||||
Inflation rate contracts | |||||||
Equity and credit contracts | |||||||
Total derivatives held for trading | |||||||
Derivatives held for hedging | |||||||
Designated as fair value hedges: | |||||||
Exchange rate contracts | |||||||
Interest rate contracts | |||||||
Inflation rate contracts | |||||||
0 | |||||||
Designated as cash flow hedges: | |||||||
Exchange rate contracts | |||||||
Interest rate contracts | |||||||
1 | |||||||
Total derivatives held for hedging | |||||||
Derivative netting1 | – | ( | ( | – | ( | ( | |
Total derivatives | |||||||
1 Derivative netting excludes the effect of cash collateral, which is offset against the gross derivative position. The amount of cash collateral received that had been offset against the gross derivative assets was
£1,148 m (2025: £827 m) and the amount of cash collateral paid that had been offset against the gross derivative liabilities was £36 m (2025: £23 m).
30 June 2026 | 31 December 2025 | |
£m | £m | |
Loans and advances to customers: | ||
Other debt instruments | ||
30 June 2026 | 31 December 2025 | |
£m | £m | |
Loans and advances to customers | ||
Credit impairment loss allowances on loans and advances to customers | ( | ( |
Residual value and voluntary termination provisions on finance leases | ( | ( |
Net loans and advances to customers |
For movements in expected credit losses, see the 'Movement in total exposures and the corresponding ECL' table in the Santander UK group level - Credit risk
review section of the Risk review.
Loans and advances to customers increased mainly due to the acquisition of TSB, as set out in Note 29.
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The information in this Note relates to securitisations and covered bonds for consolidated structured entities, used to obtain funding or collateral. It excludes
securitisations and structured entities relating to credit protection transactions.
In H1-26, there were no significant changes to the securitisations and covered bond programmes as set out in the Consolidated Financial Statements in the 2025
Annual Report except that, as a result of the acquisition of TSB, as set out in Note 29, the Duncan mortgage-backed securitisation structure and £10 bn Global
Covered Bond Programme were acquired, as follows.
Other mortgage-backed securitisations - Duncan
Loans and advances to customers include loans securitised under securitisation programmes which have been sold to bankruptcy remote structured entities. As
the structured entities are funded by the issue of debt on terms whereby the majority of the risks and rewards of the portfolio are retained by Santander UK, the
structured entities are consolidated fully and all of these loans are retained on the balance sheet, with the related notes in issue included within debt securities in
issue.
The programmes feature revolving structures where principal receipts received from the mortgages are used to replenish the portfolio of mortgages held by the
structured entities, subject to certain eligibility criteria. The programmes include certain triggers that could result in the notes being repayable on demand,
including a default by the issuer in the payment of any amounts due in respect of the issued notes.
Covered bonds - £10bn Global Covered Bond Programme
Loans and advances to customers have been assigned to a limited liability partnership to provide security for the issuance of covered bonds. TSB Bank plc, and
hence the Santander UK group, retains the risks and rewards associated with these loans and the loans continue to be recognised on the balance sheet. The
related covered bonds in issue are included within debt securities in issue. Deposits are available for the repayment of the term advances related to covered
bonds and other legal obligations.
30 June 2026 | 31 December 2025 | |
£m | £m | |
Mortgage-backed master trust structures: | ||
– Holmes | ||
– Fosse | ||
Other mortgage-backed securitisation structures: | ||
– Duncan | ||
Other asset-backed securitisation structures: | ||
– Repton | ||
Total securitisation programmes | ||
Covered bond programme: | ||
–€ | ||
–£ | ||
Total securitisation and covered bond programmes |
Internal issuances | External issuances | Internal redemptions | External redemptions | ||||||||
H1-26 | H1-25 | H1-26 | H1-25 | H1-26 | H1-25 | H1-26 | H1-25 | ||||
£m | £m | £m | £m | £m | £m | £m | £m | ||||
Mortgage-backed master trust structures: | |||||||||||
–Holmes | |||||||||||
Covered bond programme: | |||||||||||
–€ | |||||||||||
In January 2025, £200 m of the Fosse retained notes were sold to an external counterparty.
Prior to its acquisition, TSB held bonds issued as part of the Santander UK €35 bn Global Covered Bond Programme. As a result of the acquisition, this holding
has moved from external to internal.
30 June 2026 | 31 December 2025 | |
£m | £m | |
Agreements with banks | ||
Agreements with customers | ||
0 |
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30 June 2026 | 31 December 2025 | |
£m | £m | |
Debt securities | ||
A significant portion of the debt securities are held in our eligible liquidity pool and consist mainly of government bonds and covered bonds.
Debt securities increased mainly due to the acquisition of TSB, as set out in Note 29.
On 30 April 2026, Santander UK plc acquired 100 % of the ordinary share capital of TSB Banking Group plc ('TSB HoldCo'). The acquisition included TSB
HoldCo's subsidiary undertakings, TSB Bank plc and TSB Covered Bonds (LM) Ltd (20 % ownership). There are also two further consolidated subsidiary
undertakings, TSB Covered Bonds (Holdings) Ltd and TSB Banking Group plc Employee Share Trust, in which TSB HoldCo does not directly hold any share
capital. However, these entities are consolidated within the Santander UK group because the nature of the relationship indicates control. Following the change of
control, TSB HoldCo was re-registered as a private limited company on 19 May 2026 and renamed TSB Banking Group Limited. There have been no other
significant changes to the Santander UK group's interests in subsidiaries, joint ventures and unconsolidated structured entities, as set out in Note 18 to the
Consolidated Financial Statements in the 2025 Annual Report. All companies operate principally in their country of incorporation or registration.
The four TSB securitisation structured entities are fully consolidated. The loans are retained on Santander UK's balance sheet, with the related notes in issue
included within debt securities in issue. For further details, see Note 10.
At 30 June 2026, intangible assets comprised goodwill of £1,868 m (2025: £1,199 m), brand names of £29 m (2025: £nil ), Core deposit intangibles (CDI) of £294 m,
(2025: £nil ), Purchased Credit Card Receivables (PCCR) of £16 m (2025: £nil ), and computer software of £293 m (2025: £312 m). In H1-26, goodwill, brand
names, CDI, and PCCR were recognised as a result of the acquisition of TSB, as described in Note 29.
At 30 June 2026, a review was performed to identify any potential impairment indicators for goodwill, excluding the balance recognised on the acquisition of TSB.
No indicators of impairment were identified and so a full impairment test was not performed for H1-26.
There have been no significant changes to the sensitivity of value in use (VIU) to changes in assumptions, including changes required to achieve nil headroom,
as set out in Note 19 to the Consolidated Financial Statements in the 2025 Annual Report which did not include sensitivities relating to the TSB intangible assets
acquired as set out in Note 29.
Property | Office fixtures and equipment | Computer software | Operating lease assets | Right-of-use assets | Total1 | |
£m | £m | £m | £m | £m | £m | |
Cost: | ||||||
At 1 January 2026 | ||||||
Acquisition of business | ||||||
Additions | ||||||
Disposals | ( | ( | ( | ( | ( | |
At 30 June 2026 | ||||||
Accumulated depreciation and impairment: | ||||||
At 1 January 2026 | ||||||
Charge for the period | ||||||
Impairment during the period | ||||||
Disposals | ( | ( | ( | ( | ( | |
At 30 June 2026 | ||||||
Carrying amount |
1 Property, plant and equipment includes investment properties of £16 m (2025: £16 m).
See Note 21 for further details on the property provision made as part of transforming our branch network.
Property, plant and equipment increased mainly due to the acquisition of TSB, as set out in Note 29.
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30 June 2026 | 31 December 2025 | |
£m | £m | |
Items in the course of transmission1 | ||
Deposits held as collateral | ||
Other deposits2 | ||
Amounts due to other Santander UK Group Holdings plc subsidiaries | ||
1 Includes £500 m (2025: £503 m) of balances relating to settlement activities.
2 Includes balance drawn from the TFSME of £4.5 bn (2025: £3.9 bn).
30 June 2026 | 31 December 2025 | |
£m | £m | |
Demand and time deposits1 | ||
Amounts due to other Santander UK Group Holdings plc subsidiaries | ||
Amounts due to Santander UK Group Holdings plc2 | ||
Amounts due to fellow Banco Santander subsidiaries and joint ventures | ||
0 |
1 Includes capital amount guaranteed / protected equity index-linked deposits of £69 m (2025: £87 m).
2 Includes downstreamed funding from our immediate parent company Santander UK Group Holdings plc.
Deposits by customers increased mainly due to the acquisition of TSB, as set out in Note 29.
30 June 2026 | 31 December 2025 | |
£m | £m | |
Agreements with banks | ||
Agreements with customers | ||
0 |
30 June 2026 | 31 December 2025 | |
£m | £m | |
Structured Notes Programmes | ||
Structured deposits | ||
Zero Amortising Guaranteed Notes | ||
0 |
30 June 2026 | 31 December 2025 | |
£m | £m | |
Medium-term notes | ||
Downstreamed from Santander UK Group Holdings plc to Santander UK plc | ||
Euro € | ||
£ | ||
US $ | ||
Certificates of deposit | ||
Credit linked notes | ||
Securitisation programmes | ||
Debt securities in issue increased mainly due to the acquisition of TSB, as set out in Note 29.
Santander UK plc60
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Customer remediation - Motor | Restructuring | Property | Other - restructuri ng and specific provisions | ECL on undrawn facilities and guarantees | Regulatory levies and fees | Bank Levy | Litigation and other regulatory | Customer remediation - other | Other - fraud and operational losses | Total | |
£m | £m | £m | £m | £m | £m | £m | £m | £m | £m | £m | |
At 1 January 2026 | |||||||||||
Additional provisions | |||||||||||
Provisions released | ( | ( | ( | ||||||||
Utilisation and other | ( | ( | ( | ( | ( | ( | ( | ( | ( | ( | |
Reclassification from provisions to other assets | |||||||||||
At 30 June 2026 | |||||||||||
Income statement line | Restructuring and specific provisions | Credit impairment charges | Regulatory fees and levies | Operating expenses | |||||||
The last row in the table above shows where the additional provisions and provisions released appear in the income statement.
Restructuring and specific provisions
Motor finance broker commissions
Following the Financial Conduct Authority’s (FCA) Motor Market review in 2019 which resulted in a change in rules in January 2021, Santander Consumer (UK)
plc (SCUK) received several county court claims and complaints in respect of its historical use of discretionary commission arrangements (DCAs) prior to the
2021 rule changes. In January 2024, the FCA commenced a review of the use of DCAs between lenders and credit brokers (the FCA Review). Pending the
conclusion of its review, the FCA paused the handling of motor finance commission related complaints. The pause was in place until 31 May 2026. A claim was
issued against SCUK, Santander UK plc and others in the Competition Appeal Tribunal (CAT), alleging that SCUK’s historical DCAs in respect of used car
financing operated in breach of the Competition Act 1998. These proceedings have been stayed until the end of December 2026.
On 1 August 2025, the Supreme Court in Hopcraft, Wrench and Johnson overturned the Court of Appeal decision that motor dealers acting as credit brokers
owed fiduciary or disinterested duties to their customers. The Supreme Court found that commission payments by lenders to motor dealers would not be unlawful
on that basis. In addition, the Supreme Court held that an unfair relationship under s.140A of the Consumer Credit Act 1974 had arisen in one of the cases on its
facts and awarded the amount of the commission paid by the lender plus interest at a commercial rate as the remedy. It also confirmed that the test for unfairness
was highly fact sensitive and it outlined a series of non-exhaustive factors to consider in assessing unfair relationships in this context (indicating that no or partial
disclosure was not necessarily enough on its own to constitute an unfair relationship).
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 decided not to challenge the scheme and to focus on its implementation
in order to bring greater certainty to its customers. Santander UK updated its scenarios and assumptions including operational and legal costs. This resulted in a
total provision of £633 m at 31 March 2026. After utilisation of costs incurred to date, a provision of £623 m remained at 30 June 2026.
Applications have been made by certain lenders and a consumer group to challenge aspects of the scheme before the Upper Tribunal. On 1 July 2026, the
Tribunal made orders providing for the management of those proceedings and partially suspending certain elements of the scheme including making
compensation payments pending determination of the challenges. The substantive hearing is expected to take place by Q1 2027. As a result, the legal and
regulatory outcomes, and the nature, extent and timing of any remediation action remain uncertain. Santander UK has not incorporated the potential impact of
the legal challenges into its provision estimate as the impact is not considered material based on current estimates. The ultimate financial impact could differ due
to factors such as customer response rates and average cost of redress. Santander UK will continue to keep the provision under review as further developments
emerge.
Transforming our Branch Network
The 95 branch closures announced in Q1-25 have now completed following the closure of the final 14 branches in March 2026.
In Q1-26 we announced further changes to our branch network to enable the bank to better serve the changing needs of its customers. Started in April 2026, the
changes involve the closure of 44 branches, with new Community Bankers providing local communities with ongoing face-to-face support in these locations. Our
refreshed network will consist of 305 branches including 244 full-service branches, 19 counter-free branches, 36 reduced-hour branches, and 6 Work Cafés,
alongside 111 Santander Locals. As part of these changes, approximately 287 of our colleagues were placed at risk of redundancy, with support provided to
those impacted, including assistance in finding redeployment roles within the bank, access to specialist outplacement support, and dedicated wellbeing support.
As a result, we have taken £30 m in charges in Q1-26, including £10 m in redundancy provisions and £9 m in property provisions which are included in the table
shown above. The remaining £11 m relates to impairment of property, see Note 15.
Regulatory levies and fees
Regulatory levies and fees are payable to regulatory bodies such as the FCA, PRA and Bank of England in the ordinary course of business. In H1-26 there were
charges of £83 m (H1-25: £93 m) including £40 m (H1-25: £39 m) relating to the Bank of England levy.
Other - fraud and operational losses
In H1-26, Other - fraud and operational losses provisions included charges for operational risk provisions of £48 m (H1-25: £42 m), including fraud losses of £33 m
(H1-25: £25 m).
Santander UK plc61
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30 June 2026 | 31 December 2025 | |
£m | £m | |
Assets/(liabilities) | ||
Funded defined benefit pension scheme - surplus | ||
Unfunded pension and post-retirement medical benefits | ( | ( |
Total net assets |
a) Defined contribution pension plans
An expense of £41 m (H1-25: £39 m) was recognised for defined contribution plans in the period and is included in staff costs within operating expenses.
b) Defined benefit pension schemes
A credit to the income statement of £10 m (H1-25: £4 m) was recognised for defined benefit plans in the period.
The amounts recognised in other comprehensive income were as follows:
For the half year to
30 June 2026 | 30 June 2025 | |
£m | £m | |
(Loss) on plan assets (excluding amounts included in net interest expense) | ( | ( |
Actuarial gains arising from changes in demographic assumptions | ||
Actuarial (losses) arising from experience adjustments | ( | ( |
Actuarial gains arising from changes in financial assumptions | ||
Pension remeasurement | ( |
During the period, a buy-in transaction covering the majority of deferred and pensioner members in one of the seven sections of the main defined benefit scheme
was completed. The transaction insured benefits representing approximately 20 % of the total defined benefit obligation. The qualifying insurance policy is
included within plan assets. As the premium paid exceeded the present value of the defined benefit obligation covered, a loss on plan assets is included in the
loss shown above.
30 June 2026 | 31 December 2025 | |
£m | £m | |
Present value of defined benefit obligations | ( | ( |
Fair value of scheme assets | ||
Net defined benefit assets |
Actuarial assumptions
30 June 2026 | 31 December 2025 | |
% | % | |
To determine benefit obligations1: | ||
- Discount rate for scheme liabilities | ||
- General price inflation | ||
- General salary increase | ||
- Expected rate of pension increase |
Years | Years | |
Longevity at 60 for current pensioners, on the valuation date: | ||
- Males | ||
- Females | ||
Longevity at 60 for future pensioners currently aged 40, on the valuation date: | ||
- Males | ||
- Females |
1 The discount rate and inflation-related assumptions set out in the table above reflect the assumptions calculated based on the Scheme’s duration and cash flow profile as a whole. The actual assumptions used
were determined for each section independently based on each section’s duration and cash flow profile.
The majority of the liability movement in H1-26 was due to the increase in the discount rate, partially offset by an increase in the inflation assumption arising from
changes in market conditions as well as adverse inflation experience.
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Actuarial assumption sensitivities
period, while holding all other assumptions constant.
(Decrease)/increase | |||
30 June 2026 | 31 December 2025 | ||
Assumption | Change in pension obligation at period end from | £m | £m |
Discount rate | ( | ( | |
General price inflation | |||
Mortality | |||
30 June 2026 | 31 December 2025 | |
£m | £m | |
£ | ||
Undated subordinated liabilities | ||
Dated subordinated liabilities | ||
0 |
In H1-26, no debt securities and subordinated liabilities were repurchased, (H1-25: £3 m loss).
Dated Subordinated liabilities increased mainly due to the acquisition of TSB, as set out in Note 29.
30 June 2026 | 31 December 2025 | |
£m | £m | |
Guarantees given to third parties | ||
Formal standby facilities, credit lines and other commitments | ||
Other legal, regulatory or tax matters
Santander UK engages in discussion, and co-operates with the FCA, PRA, CMA and other regulators and government agencies in various jurisdictions in their
supervision and review of Santander UK including reviews exercised under statutory powers, regarding its interaction with past and present customers, both as
part of general thematic work and in relation to specific products, services and activities. During the ordinary course of business, Santander UK is also subject to
complaints, threatened and issued legal proceedings (including a number of issued omnibus proceedings relating to PPI) brought by or on behalf of current or
former employees, customers, investors or other third parties. In addition, Santander UK is subject to audits, reviews, challenges and tax, regulatory or law
enforcement investigations or proceedings by relevant regulators or government agencies in various jurisdictions. All such matters are assessed periodically to
determine the likelihood of Santander UK incurring a liability.
In those instances where it is concluded that it is not yet probable that a quantifiable payment will be made, for example because the facts are unclear or further
time is required to fully assess the merits of the case or to reasonably quantify the expected payment, no provision is made. In addition, where it is not currently
practicable to estimate the possible financial effect of these matters, no provision is made.
To the extent that Santander UK incurs certain losses as a result of specific compliance issues, Santander UK has the benefit of certain warranties and
indemnities given by Banco de Sabadell, S.A. in the sale and purchase agreement relating to the acquisition of TSB Banking Group plc. Any claims by Santander
UK under that agreement are subject to the contractual limitations of liability as set out therein.
Motor finance broker commissions
As set out in Note 21, in Q1-26, Santander UK updated its provision for historical motor finance commission payments. There continue to be uncertainties as to
any future legal or regulatory development and the extent of remediation action. As such, the ultimate financial impact could differ from the amount provided.
Based on Management's range of scenarios, the unweighted provision for the upper range estimate would result in an increase in provision from £623 m to
£684 m.
German dividend tax arbitrage transactions
In June 2018, the Cologne Criminal Prosecution Office and the German Federal Tax Office commenced an investigation in relation to the historical involvement of
Santander UK plc, Santander Financial Services plc and Cater Allen International Limited (all subsidiaries of Santander UK Group Holdings plc) in German
dividend tax arbitrage transactions (known as cum/ex transactions). These transactions allegedly exploited a loophole of a specific German settlement
mechanism through short-selling and complex derivative structuring which resulted in the German government either refunding withholding tax where such tax
had not been paid or refunding it more than once. The German authorities are investigating numerous institutions and individuals in connection with alleged
transactions and practices which may be found to be illegal under German law.
During H1-26 we continued to cooperate with the German authorities and, with the assistance of external experts, to progress an internal investigation into the
matters in question. From Santander UK plc’s perspective, the investigation is focused principally on the period 2009-2011 and remains on-going. There remain
factual issues to be resolved which may have legal consequences including potentially material financial liabilities. These issues create uncertainties which mean
that it is difficult to predict the resolution of the matter including timing or the significance of the possible impact. These uncertainties mean it is not currently
practicable to make a reliable assessment of the size of any related potential liability. Any potential losses, claims or expenses suffered or incurred by Santander
Financial Services plc in respect of these matters have been fully indemnified by Santander UK plc, as part of the ring-fencing transfer scheme between
Santander UK plc, Santander Financial Services plc and Banco Santander SA.
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Payment Protection Insurance claim
AXA France IARD and AXA France Vie (former GE Capital Corporation Group entities (GE Capital), known as Financial Insurance Company Ltd (FICL) and
Financial Assurance Company Ltd (FACL), acquired by AXA SA in 2015) (together, AXA France) brought a claim against (i) Santander Cards UK Limited
(formerly known as GE Capital Bank Limited (GECB), which was acquired by Banco Santander SA in 2008 and subsequently transferred to Santander UK plc);
and (ii) Santander Insurance Services UK Limited (a Banco Santander SA subsidiary) (SISUK and together with GECB the Santander Entities). The claim relates
to the allocation of liability for compensation and associated costs in respect of a large number of PPI policies distributed by GECB pre-2005, which were
underwritten by FICL and FACL.
On 25 July 2025, the Commercial Court of England and Wales handed down its judgment in relation to the claim brought by AXA France (the Judgment). It found
against SISUK in relation to AXA France’s claim pursuant to an indemnity in an agency agreement entered between GECB, FICL and FACL in 2000 and novated
by GECB to SISUK in 2010. It also found GECB negligent in the sale of PPI policies, but this element of the claim was time barred to PPI policies sold in the
period between 2002 and 2005 and overlaps with the indemnity claim.
In October 2025, the Santander Entities obtained permission to appeal the findings in the Judgment relating to the application of the indemnity arising from PPI
sales occurring before the indemnity had been agreed in December 2000 (Santander Appeal). In January 2026, AXA France obtained permission to cross-
appeal the Commercial Court’s rejection of AXA France’s contribution claim made under the Civil Liability (Contribution) Act 1978 against Santander Cards UK
Limited. If the Santander Entities and AXA are both successful in their respective appeals, subject to any further appeal and defences which may be available to
the Santander Entities, the Court of Appeal may find that Santander Cards UK Limited has a liability in contribution to AXA France for an amount to be
determined by the Court.
With respect to the Santander Appeal and AXA France’s cross-appeal, there are points of legal interpretation to be resolved and, in the case of the cross-appeal,
factual points to be determined. In addition to the significant uncertainties outlined above as to whether any exposure for Santander Cards UK Limited will arise, it
is noted that any such exposure would represent a reallocation of the costs already paid and recognised by other entities within the Banco Santander SA Group.
The significant uncertainties make it difficult to predict the timing or the significance of the possible impact for the Santander UK group. With that context (and
subject to the foregoing), the Santander UK group notes that its maximum potential exposure is approximately £528 m. The Santander Appeal and AXA France’s
cross appeal were heard in July 2026 with a decision expected in H2 2026.
No customers have suffered loss as a consequence of the claim brought by AXA France or the Judgment, nor does it impact upon past redress paid to
customers for PPI complaints.
Whistletree
Following the acquisition of TSB Bank plc (TSB), Santander UK is closely monitoring complaints and threatened or actual legal proceedings relating to TSB. In
2015, TSB purchased a portfolio of ex Northern Rock plc residential mortgage accounts (and, in certain cases, linked unsecured loans) from Cerberus Capital
Management group (the Whistletree portfolio). In 2022, group litigation proceedings were issued against TSB by certain customers (Claimants) who hold (or
held) a mortgage within the Whistletree portfolio alleging, in particular, that: (a) the manner in which TSB applied a standard variable rate was in breach of the
express and / or implied terms of the Whistletree mortgage contracts; and (b) in relation to certain Whistletree accounts, TSB’s relationship with the Claimants
was unfair when assessed in line with s140A Consumer Credit Act 1974 (CCA).
In January 2026, the Court of Appeal handed down a judgment which (a) confirmed that TSB had not breached the express terms of the Whistletree mortgage
contracts; and (b) limited TSB’s potential exposure relating to alleged s140A CCA unfairness. The Claimants have not pursued an appeal to the Supreme Court
and TSB will continue to vigorously defend the residual proceedings. It is not practicable to reliably estimate the potential exposure arising in connection with the
residual proceedings at this point in time. Any potential financial exposure is not expected to have a material adverse impact on Santander UK's financial position.
Off-balance sheet transactions
In 2025 Consumer Finance entered into a wholesale funding agreement with an existing manufacturer partner. Under the terms of the agreement, funding is
deferred and no interest is charged during the deferral period. Consequently, no financial asset has been recognised in the balance sheet at 30 June 2026.
Other
In 2016, Visa Europe Ltd was sold to Visa Inc. As a member and shareholder of Visa Europe Ltd, Santander UK received upfront consideration made up of cash
and convertible preferred stock. The convertible preferred stock is now held by Santander Equity Investments Limited (SEIL), outside the ring-fenced bank.
Conversion of the preferred stock into Class A Common Stock of Visa Inc. depends on the outcome of litigation against Visa involving UK & Ireland multilateral
interchange fees (UK&I MIFs).
In addition, Santander UK and certain other UK&I banks have agreed to indemnify Visa Inc. in the event that the preferred stock is insufficient to meet the costs of
this litigation. Visa Inc. has recourse to this indemnity once more than €1 bn of losses relating to UK&I MIFs have arisen or once the total value of the preferred
stock issued on closing has been reduced to nil . Santander UK's liability under this indemnity is capped at €40 m.
At this stage, our assessment is that the litigation will not give rise to more than €1 bn of losses relating to UK&I MIFs, which would mean that the indemnity would
not be called upon. However, the potential impact of the litigation is still not certain, and therefore it is still possible that the indemnity could be called upon.
As part of the sale of subsidiaries, businesses and other entities, and as is normal in such circumstances, Santander UK plc (and/or, where relevant, its
Interest rate | Next call date | 30 June 2026 | 31 December 2025 | |
% | £m | £m | ||
AT1 securities: | ||||
- £ | March 2026 | |||
- £ | June 2027 | |||
- £ | Sept 2029 | |||
- £ | Sept 2030 | |||
- £ | Sept 2031 | |||
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ACCEPTED AS SECURITY FOR ASSETS
Securitisations and covered bonds
Santander UK plc and certain of its subsidiaries, including TSB, issue securitisations and covered bonds through or involving structured entities. At 30 June 2026,
there were £47,815 m (2025: £37,123 m) of gross assets in these secured programmes and £3,708 m (2025: £657 m) of these related to internally retained
issuances that were available for use as collateral for liquidity purposes in the future. The acquisition of TSB increased the gross assets in these secured
programmes by £7,727 m and the amount of internally retained issuances available for use as collateral for liquidity purposes in the future by £1,492 m.
At 30 June 2026, £6,563 m (2025: £2,975 m) of notes issued under securitisation and covered bond programmes had been retained internally, a proportion of
which had been used as collateral via third party bilateral secured funding transactions, which totalled £2,293 m at 30 June 2026 (2025: £1,500 m), or for use as
collateral for liquidity purposes in the future.
There have been no material changes to the nature of related party transactions as set out in Note 37 to the Consolidated Financial Statements in the 2025
Annual Report, including as a result of the TSB acquisition. The financial position and performance of the Santander UK group were not materially affected in
H1-26 by any related party transactions, or changes to related party transactions, other than as disclosed herein.
a) Measurement basis of financial assets and liabilities
Disclosures relating to fair value measurement and hierarchy, valuation techniques and the control framework and related aspects pertaining to financial
instruments at fair value are included in the 2025 Annual Report. Valuation techniques, sensitivity methodologies and inputs at 30 June 2026 are consistent with
those described in Note 38 to the Consolidated Financial Statements in the 2025 Annual Report. The valuation techniques for TSB are consistent with Santander
UK, except for the purchase price allocation as a result of the TSB acquisition as set out in Note 29.
b) Fair values of financial instruments carried at amortised cost
central banks, which consist of demand deposits with the Bank of England, together with cash in tills and ATMs, have been excluded from the table as the
carrying amount is deemed an appropriate approximation of fair value.
30 June 2026 | 31 December 2025 | ||||
Fair | Carrying | Fair | Carrying | ||
value | value | value | value | ||
£m | £m | £m | £m | ||
Assets | |||||
Loans and advances to customers | |||||
Loans and advances to banks | |||||
Reverse repurchase agreements - non-trading | |||||
Other financial assets at amortised cost | |||||
Liabilities | |||||
Deposits by customers | |||||
Deposits by banks | |||||
Repurchase agreements - non-trading | |||||
Debt securities in issue | |||||
Subordinated liabilities | |||||
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c) Fair values of financial instruments measured at fair value
by their levels in the fair value hierarchy - Level 1, Level 2 and Level 3.
30 June 2026 | 31 December 2025 | ||||||||||
Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | Valuation | |||
£m | £m | £m | £m | £m | £m | £m | £m | technique | |||
Assets | |||||||||||
Derivative financial instruments | Exchange rate contracts | ||||||||||
Interest rate contracts | |||||||||||
Inflation rate contracts | |||||||||||
Equity and credit contracts | |||||||||||
Netting | ( | ( | ( | ( | |||||||
Other financial assets at FVTPL | Loans and advances to customers | ||||||||||
Debt securities and other debt instruments | |||||||||||
Financial assets at FVOCI | Debt securities | ||||||||||
Total assets at fair value | |||||||||||
Liabilities | |||||||||||
Derivative financial instruments | Exchange rate contracts | ||||||||||
Interest rate contracts | |||||||||||
Inflation rate contracts | |||||||||||
Equity and credit contracts | |||||||||||
Netting | ( | ( | ( | ( | |||||||
Other financial liabilities at FVTPL | Debt securities in issue | ||||||||||
Structured deposits | |||||||||||
Zero Amortising Guaranteed Notes | |||||||||||
Total liabilities at fair value | |||||||||||
Transfers between levels 1 and 2 of the fair value hierarchy
In H1-26 there were no no
d) Fair value adjustments
The internal models incorporate assumptions that Santander UK believes would be made by a market participant to establish fair value. Fair value adjustments
are adopted when Santander UK considers that there are additional factors that would be considered by a market participant that are not incorporated in the
valuation model.
Santander UK classifies fair value adjustments as either ‘risk-related’ or ‘model-related’. The fair value adjustments form part of the portfolio fair value and are
included in the balance sheet values of the product types to which they have been applied.
30 June 2026 | 31 December 2025 | |
£m | £m | |
Risk-related: | ||
- Bid-offer and trade specific adjustments | ||
- Uncertainty | ||
- Credit risk adjustment | ||
- Funding fair value adjustment | ||
Risk-related adjustments
Risk-related adjustments are driven, in part, by the magnitude of Santander UK’s market or credit risk exposure, and by external market factors, such as the size
of market spreads. There have been no significant changes to the risk-related adjustments as set out in Note 38(f) to the Consolidated Financial Statements in
the 2025 Annual Report.
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e) Internal models based on information other than market data (Level 3)
Valuation techniques
There have been no significant changes to the valuation techniques as set out in Note 38(g) to the Consolidated Financial Statements in the 2025 Annual Report.
Reconciliation of fair value measurement in Level 3 of the fair value hierarchy
Assets | Liabilities | |||||
Derivatives | Other financial assets at FVTPL | Total | Derivatives | Total | ||
£m | £m | £m | £m | £m | ||
At 1 January 2026 | ( | ( | ||||
Total gains/(losses) recognised: | ||||||
Fair value movements1 | ||||||
Settlements | ( | ( | ( | |||
At 30 June 2026 | ( | ( | ||||
Gains/(losses) recognised in profit or loss/other comprehensive income relating to assets and liabilities held at the end of the period1 | ||||||
1 Fair value movements relating to derivatives and other financial assets at FVTPL are recognised in other operating income in the income statement.
On 30 April 2026, Santander UK plc acquired 100 % of the issued ordinary share capital of TSB Banking Group plc from Banco de Sabadell SA (Sabadell). TSB
Banking Group plc and its subsidiaries (TSB) undertake banking and other financial services related activities in the UK. The consideration paid by Santander UK
plc to Sabadell at completion for the entire issued ordinary share capital of TSB Banking Group plc was £2.65 bn, plus Sabadell's estimate of the difference in
TSB's tangible net asset value between 1 April 2025 and 30 April 2026 (TNAV Variation) of approximately £213 m. The consideration paid at completion will be
adjusted upwards or downwards once the final TNAV Variation has been determined after completion. Any adjustment will be paid as soon as possible after the
final determination has been made. The transaction has been financed from Santander UK plc's existing cash resources and from funding provided by its
ultimate parent, Banco Santander SA.
In addition, consideration of £255 m was paid by Santander UK plc to acquire the AT1 securities and a further £962 m was paid to acquire the following securities:
£300 m of Fixed-to-floating rate callable subordinated Tier 2 capital notes and £650 m of Senior unsecured debt securities.
The acquisition makes Santander UK the third-largest bank by personal current accounts and fourth-largest mortgage lender. It strengthened Santander UK’s
market position and critical mass. By integrating technology across Santander UK and TSB, we expect to unlock substantial operational efficiencies and support
long-term profitability through a simplified, scalable digital banking model.
It is intended to integrate the business of TSB Bank plc into Santander UK plc through a banking business transfer scheme under Part VII of the Financial
Services and Markets Act 2000 in the first half of 2027. This integration is conditional on court sanction and regulatory non-objection.
Santander UK accounted for the acquisition of TSB as a business combination using the acquisition method under IFRS 3. At the date of acquisition, Santander
UK recognised the provisional fair value of all the identifiable assets and liabilities of TSB, including those not currently on TSB's balance sheet. For assets and
liabilities held at amortised cost, suitable valuation techniques were used to estimate their fair values. Due to the timing of the acquisition, within 12 months of
completion of the acquisition small changes in these fair values are possible.
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Book value at 30 April 2026 | FV Adjustments | Fair Value at 30 April 2026 | |
£m | £m | £m | |
Assets | |||
Cash and balances at central banks | |||
Derivative financial instruments | |||
Loans and advances to banks | |||
Loans and advances to customers | ( | ||
Other financial assets at amortised cost | ( | ||
Macro hedge of interest rate risk | ( | ||
Financial assets at fair value through other comprehensive income | |||
Intangible assets | |||
Property, plant and equipment | ( | ||
Deferred tax assets | ( | ||
Other assets | |||
Total assets | |||
Liabilities | |||
Deposits by banks | |||
Deposits by customers | ( | ||
Derivative financial instruments | |||
Debt securities in issue | |||
Macro hedge of interest rate risk | ( | ||
Other liabilities | ( | ||
Provisions | ( | ||
Deferred tax liabilities | |||
Subordinated liabilities | |||
Total liabilities | ( | ||
Fair value of net assets acquired | |||
Goodwill arising on acquisition | |||
Non-equity securities purchased | |||
Total consideration Paid/Transferred |
Goodwill of £669 m was recognised on acquisition, primarily reflecting expected revenue and cost synergies arising from the combination of Santander UK and
TSB, benefits from future technology integration and operating model simplification, the value of the assembled workforce, and other strategic benefits that do not
qualify for separate recognition as identifiable intangible assets under IFRS 3. The goodwill arising from the acquisition has been allocated to a TSB cash-
generating unit. None of the goodwill recognised is expected to be deductible for corporation tax purposes.
Fair value adjustments will be amortised or depreciated over the remaining life of the underlying items, where appropriate.
Intangible assets
Intangible assets in respect of brands, customer relationships (known as core deposit intangibles) and purchased credit card relationships were identified, as
follows:
–The TSB brand name was fair valued at £29 m. This asset has been valued using a relief-from-royalty method, which is based on the concept that if a company
owns a brand, it does not have to license one and pay royalties for its use. This approach is an income approach, where the royalty relief is recognised within
forecast cash flows, based on the hypothetical measurement of the license (royalty) payments, which would be saved as a consequence of owning the
particular asset. The relief-from-royalty method uses key assumptions including royalty rate and revenue growth.
–Core deposit intangibles (CDI) of £294 m reflects the value derived from access to a stable source of low cost on-demand deposit funding compared to the
marginal cost of alternative funding. This fair value CDI was estimated using the income approach, specifically the ‘cost of savings method’ which compares the
cost of the existing on-demand deposits (including the cost of servicing them) to the marginal cost of alternative funds from a mix of diversified funding sources
available to market participants. Management determined that a reasonable range of values existed for the Core Deposit Intangible (CDI) and benchmarked
the outcome against recent UK banking transactions. A value towards the lower end of the reasonable range was selected, reflecting management's
assessment of long-term uncertainty in deposit pricing and the appropriate allocation of value between the CDI and goodwill. The intangible asset represents
the present value of the cost savings expected to be realised over the remaining useful life of the deposits; it will be amortised over 5 years.
–Purchased credit card relationships of £16 m are an intangible asset that reflects the value to be gained from continued use of existing credit cards. It was fair
valued using an income-based methodology, with care taken to ensure no double counting of value between the fair value of credit card receivables and the
intangible asset. The intangible asset will be amortised over 3 years.
the acquired operations onto its existing, scalable technology platforms rather than continue to operate the acquired systems. On acquisition, £92 m of the £123 m
software was written down to reflect its fair value. The valuation considered the remaining useful economic life of the software, technological obsolescence,
duplication with existing systems and the perspective of a market participant, resulting in a reduction in value where the software was not expected to support its
carrying value.
No other intangible assets were identified, including any relating to key employees, patents or intellectual property rights.
Approach to valuing the assets acquired and liabilities assumed
The valuation approach to specific categories of assets and liabilities is described below:
Loans and advances to customers
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The fair value of Loans and Advances to customers was determined using a discounted cash flow methodology incorporating assumptions relating to contractual
cash flows, prepayments, operating costs, expected credit losses, and the funding and capital structure that would be adopted by a market participant. Key
financial assumptions, including the cost of debt and equity, funding mix and regulatory capital requirements, were benchmarked against Santander's experience
and observable market data, where appropriate. The resulting fair value adjustments recognised on acquisition will be amortised over the remaining expected life
of the assets. Given that the weighted average lives of overdrafts are typically short and relate to relatively new business, net book value was used as an
approximation of their fair value. The fair value of loans and advances to customers was £35,983 m. The gross contractual amount of the loans and advances
receivable from customers was £36,184 m. The determination of their fair values is an area of considerable estimation and uncertainty as there is no observable
market and values are significantly affected by customer behaviour. Accordingly, at the acquisition date, the portfolio was recognised at fair value, with a £201 m
adjustment between the contractual cash flows and the acquisition-date fair value. This adjustment reflects the combined impact of expected credit losses and
other market participant pricing assumptions included in the fair value measurement.
Deposits by customers
The majority of deposit liabilities are payable on demand with the fair value equal to the carrying value. Certain of the deposit liabilities are at a fixed rate until
maturity. The deficit/surplus of fair value over carrying value of these liabilities has been estimated by reference to the market rates available at the balance sheet
date for similar deposit liabilities of similar maturities. The fair value of such deposit liabilities has been estimated using a discounted cash flow methodology.
Debt Securities in Issue
The fair value of debt securities in issue and subordinated liabilities has been calculated using quoted market prices or, where relevant, the purchase price
agreed with Sabadell.
Sensitivity of fair value measurement of acquired assets and liabilities
The fair value measurement of the acquired lending portfolios and CDI recognised as part of the acquisition of TSB is sensitive to the funding assumptions
applied in determining the present value of future cash flows.
Funding assumptions represent a significant judgement within the purchase price allocation. In particular, the valuation is sensitive to assumptions regarding the
funding mix and funding spread that would be available to a market participant acquiring the portfolios.
Had management applied different funding assumptions, a higher or lower fair value adjustment may have resulted and could have had a material impact on the
value of assets recognised as part of the acquisition accounting.
Funding sensitivity
The fair value adjustment to mortgages is £229 m and CDI value is £294 m and these represent the most significant elements of the fair value calculation, with
changes primarily driven by the funding mix and the funding spread assumptions applied.
The funding structure assumes an 80 % retail deposit and 20 % wholesale debt funding mix, consistent with Santander's funding strategy and that of other large
UK banks.
Retail deposits represent the primary source of funding and therefore have a significant influence on the overall funding cost. The blended funding spread used is
reflect a reasonable range of outcomes around the base assumption.
The discount rate used to fair value the balance sheet as at the acquisition date is based on the annual yield that market participants would require at that date
for assets with similar characteristics and risks.
market participant return expectations and the inherent uncertainty in estimating the appropriate discount rate.
Funding spread assumption | Impact on mortgage fair value | Impact on CDI | Net impact on purchase price allocation |
£m | £m | £m | |
+/- | ( | ||
Discount Rate assumption | Impact on mortgage fair value | Impact on CDI | Net impact on purchase price allocation |
+/- | ( | ( | ( |
Initial accounting
The fair value measurement of identifiable assets acquired and liabilities assumed may be adjusted following management's finalisation of its acquisition date fair
value estimates if new information about facts and circumstances existing on the date of the acquisition is obtained. In accordance with IFRS 3 ‘Business
combinations’, any such adjustment can be made for up to a maximum of one year from the acquisition date.
Acquisition costs of £85 m were not included in the consideration transferred and were recognised under restructuring and specific provisions. Post acquisition
costs of £44 m in H1-26, and £25 m of pre-acquisition costs in Q1-26 were also recognised under restructuring and specific provisions.
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Post acquisition
Since the acquisition date, total net operating income of £200 m, a loss before tax of £25 m and a loss after tax of £21 m from TSB have been included in the
income statement for the six months ended 30 June 2026.
Had TSB been acquired on 1 January 2026, management has estimated that the Santander UK group's net operating income and profit after tax for the six
months ended 30 June 2026 would have been £2,877 m and £445 m, respectively. In determining these amounts, management has assumed that the fair value
adjustments that arose on acquisition as part of the purchase price allocation would have been the same if the acquisition had occurred on 1 January 2026. The
pro forma net operating income and profit after tax figures do not purport to represent what the Santander UK group’s actual results would have been had the
acquisition occurred on 1 January 2026, nor are they indicative of future results.
Net cash flow from acquisition
As set out in Note 1, certain balances included in cash and balances at central banks and loans and advances to banks are excluded from the Santander UK
group’s definition of cash and cash equivalents in the cash flow statement. This is either where the balances are not liquid in nature, or where they relate to cash
collateral and other deposit balances held in respect of derivative activities. A reconciliation between the balance sheet values acquired and the net cash flow
from the acquisition of TSB presented in the Santander UK group’s cash flow statement is:
At 30 April 2026 | |
£m | |
Cash, cash balances at central banks and other demand deposits on acquisition | |
Adjustments for items not classified as cash and cash equivalents 1 | ( |
Cash and cash equivalents acquired | |
Cash paid for ordinary shares | ( |
Cash paid for AT1 securities | ( |
Cash paid for debt securities | ( |
Net cash flow from acquisition of TSB | ( |
1 Reserves Collateralisation Accounts (RCAs).
There have been no significant events between 30 June 2026 and the date of approval of these financial statements which would require a change to or
additional disclosure in the financial statements, except:
Dividends
The Board declared a dividend of £456 m after the reporting date that was paid on 30 July 2026. Retained earnings and cashflows have not been adjusted to
reflect this post balance sheet dividend.
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Shareholder information | ||||
Contents | ||||
Forward-looking statements | 71 | |||
Calculations | 71 | |||
Glossary | 71 | |||
Board changes | 71 | |||
Risk factors | 72 | |||
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Forward-looking statements
The Company and its subsidiaries (together Santander UK) may from time to time make written or oral forward-looking statements. The Company makes written
forward-looking statements in this Half Yearly Financial Report and may also make forward-looking statements in its periodic reports to the SEC on Forms 20-F
and 6-K, in its offering circulars and prospectuses, in press releases and other written materials and in oral statements made by its officers, directors or
employees to third parties.
By their very nature, forward-looking statements are not statements of historical or current facts; they cannot be objectively verified, are speculative and involve
inherent risks and uncertainties, both general and specific, and risks exist that the predictions, forecasts, projections and other forward-looking statements will not
be achieved. Santander UK cautions 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 made by Santander UK or on its behalf. For more, see ‘Forward-looking
statements’ in the Shareholder information section of our Annual Report on Form-20-F for the year ended 31 December 2025 (the "2025 20-F").
Please refer to the 2025 20-F for a discussion of certain risk factors and forward-looking statements. Undue reliance should not be placed on forward-looking
statements when making decisions with respect to any Santander UK member and/or its securities. Investors and others should take into account the inherent
risks and uncertainties of forward-looking statements and should carefully consider the non-exhaustive list of important factors in the 2025 20-F, and how it could
affect our operations and financial position. Forward-looking statements speak only as of the date on which they are made and are based on the knowledge,
information available and views taken on the date on which they are made; such knowledge, information and views may change at any time. Santander UK does
not undertake any obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.
Calculations
There have been no changes to the Santander UK group’s calculations as set out in our 2025 Annual Report.
Measure | Description and calculation |
Non-interest income | Net fee and commission income plus other operating income. |
POCI ratio | Sum of POCI drawn assets divided by the sum of total drawn assets. |
Stage 1 ratio | The sum of Stage 1 drawn assets divided by the sum of total drawn assets. |
Stage 2 ratio | The sum of Stage 2 drawn assets divided by the sum of total drawn assets. |
Stage 3 ratio | The sum of Stage 3 drawn and Stage 3 undrawn assets divided by the sum of total drawn assets and stage 3 undrawn assets. |
Wholesale funding | Deposits by customers 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. |
Glossary
There have been no significant changes from the glossary in the 2025 Annual Report, except:
Core deposit intangibles
An intangible asset recognised on acquisition that reflects the value derived from access to a stable source of low cost on-demand deposit funding compared to
the marginal cost of alternative funding. The intangible asset represents the present value of the cost savings expected to be realised over the remaining useful
life of the deposits.
Purchased credit card relationships
An intangible asset recognised on acquisition that reflects the value that is expected to be generated from existing credit card customers who will continue to
borrow using their credit cards into the future. This is valued using a discounted cash flow approach to determine the present value of cash flows attributable to
future spending.
Purchased or Originated Credit-Impaired (POCI) loans
Accounting rules require credit impaired loans recognised on acquisition to be classified separately as POCI.
Board changes
The following changes to the Board of Directors of Santander UK Group Holdings plc and Santander UK plc (together, the Boards) have taken effect in the year
to date or have been announced and will take effect in the year:
•On 25 February 2026, Enrique Alvarez resigned as an Executive Director from the Boards.
•On 1 March 2026, Mahesh Aditya was appointed Chief Executive Officer with effect from 1 March 2026, whilst Mike Regnier stepped down as CEO
and resigned as an Executive Director from the Boards, with effect from 27 February 2026.
•On 5 March 2026, the Boards approved the appointments of Victoria Roig and Manuel Preto as Group-nominated Non-Executive Directors, with effect
from 13 March 2026.
•On 12 March 2026, Pedro Castro e Almeida resigned from the Boards.
•On 31 October 2026, Angel Santodomingo will resign as an Executive Director from the Boards.
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Risk factors
An investment in Santander UK plc (the Company) and its subsidiaries (us, we or Santander UK) involves a number of risks. A summary of the material risks is
set out in the ‘Shareholder information’ section of the 2025 Annual Report on Form 20-F. The principal risks described in these risk factors remain unchanged,
except for: 'If Santander is unable to manage the growth of its operations, this could have a material adverse impact on its profitability, 'Santander UK is subject to
substantial and evolving regulation and governmental oversight' and 'Santander UK is exposed to risk of loss and damage from civil litigation and/or criminal legal
and regulatory proceedings' which have been replaced as follows:
If Santander UK is unable to manage the growth of its operations, including the integration of TSB, this could have a material adverse impact on
its profitability
Santander UK allocates management and planning resources to developing strategic plans for organic growth and identifying potential opportunities for
acquisitions, disposals, partnerships, or business restructurings. In April 2026, Santander UK completed the acquisition of TSB.
The integration of TSB into Santander UK is expected to accelerate Santander UK’s transformation and strengthen its market position. Successful delivery will
require Santander UK to maintain a stable operating model, ensure a smooth customer transition, preserve franchise value, and realise planned synergies.
Actual results associated with the acquisition of TSB may differ from anticipated results, including with respect to: (i) the overall future performance of the assets
and liabilities acquired; (ii) the level of integration achieved, and the cost and timing of the integration; and (iii) the ability to retain key employees and maintain
relationships with customers and suppliers.
The integration will also require significant management attention alongside ongoing transformation initiatives, which may affect the availability of resources and
divert management attention from other priorities. For example, Santander UK has paused certain existing corporate development projects and is prioritising a
limited number of relevant group initiatives that do not impact core integration activity, such as CCB, in order to create capacity for the integration of TSB. The
integration process could also lead to inconsistencies in controls, procedures and policies, which could negatively impact Santander UK’s ability to maintain
relationships with customers, suppliers and other business stakeholders.
In addition, the acquisition and integration of TSB may expose Santander UK to unexpected historical liabilities, such as in relation to tax, and may reveal control
deficiencies, errors or misstatements which could be material, including in relation to TSB’s financial reporting, systems or controls, as TSB’s governance, risk
management, financial reporting and internal control frameworks are assessed, tested and aligned to Santander UK standards, including Santander UK’s internal
control over financial reporting.
This growth agenda is being executed in a more competitive UK banking market, where incumbent banks, building societies and digital banks are investing in
scale, digital capability, automation and broader customer propositions. If Santander UK is unable to manage growth initiatives effectively, it may be less able to
respond to competitive pressure or realise expected strategic and financial benefits from the TSB acquisition or other strategic growth initiatives. Growth also
needs to be supported by an appropriate liability and funding profile. In Santander UK’s case, the profitability of growth depends not only on increasing assets,
customers or scale, but also on attracting and retaining stable, cost-effective funding.
Santander UK continues to evaluate other inorganic growth opportunities, including acquisitions, disposals, and partnerships, that align with its strategic priorities
and create value for customers and shareholders. However, suitable opportunities may not be identified, and transactions or partnerships may be delayed, not
executed on favourable terms or may fail to complete. Participation in transactions that do not conclude can also disrupt operations and divert management
attention.
Assessments of potential acquisitions or partnerships are based on limited information and forward-looking assumptions that may prove to be inaccurate. The
ability to realise expected benefits from any such acquisitions and partnerships will depend in part on the successful integration and alignment with Santander
UK’s strategic and operational frameworks. The success of such initiatives, including the integration of TSB, is, in part, subject to political, economic, and market
factors that are beyond Santander UK’s control. There can be no assurance that anticipated synergies or returns will materialise. There may also be unforeseen
difficulties in integrating operations and systems, unexpected liabilities or contingencies relating to acquired businesses, including legal claims and regulatory
investigations and challenges in retaining key employees and customers.
Santander UK’s ability to manage growth and execute its strategy effectively depends on its capacity to:
•manage operations and workforce efficiently;
•maintain and expand its customer base;
•execute strategic priorities on time and in full;
•conduct robust due diligence and valuation of potential targets;
•secure funding for strategic initiatives;
•integrate new entities or investments successfully;
•align and scale IT systems to support an enlarged business;
•apply risk management policies consistently and efficiently across a broader group; and
•pursue opportunities within capital constraints at the Santander UK group level.
Any or all of these factors, individually or collectively, could have a material adverse effect on Santander UK’s operations, financial condition and prospects. They
could also delay strategic delivery, weaken the expected benefits of TSB integration or other growth initiatives, or limit Santander UK’s ability to respond
effectively to competition.
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Santander UK is subject to substantial and evolving regulation and governmental oversight
As a financial services group, Santander UK is subject to extensive financial services laws, regulations, administrative actions and policies in the UK, and in each
other location in which Santander UK operates. For a discussion of the principal laws and regulations to which Santander UK is subject, see 'Regulation of the
Santander UK group'. The sector continues to face unprecedented levels of government and regulatory intervention and scrutiny, including changes to the
regulations governing financial institutions and the conduct of business. In addition, regulatory and governmental authorities have continued to consider further
enhanced or new legal or regulatory requirements intended to reduce the probability and impact of future crises (or otherwise assure the stability and operational
resilience of institutions under their supervision), enhance consumer protection, address climate change risks, the risk of greenwashing and environmental, social
and governance risks generally, and improve controls in relation to financial crime-related risks. Santander UK expects regulatory and government intervention in
the banking sector to remain high for the foreseeable future. An intensive approach to supervision is maintained in the UK by the BoE as resolution authority, the
PRA, the FCA, the Competition and Markets Authority (CMA), the Payment Systems Regulator (PSR), the Information Commissioner’s Office (ICO) and the
Serious Fraud Office (SFO).
Changes in UK legislation and regulation applicable to the financial sector may also affect Santander UK’s competitive position, particularly if such changes are
implemented before international consensus is reached on key issues affecting the industry. There has been recognition by the UK Government that changes
need to be made to the UK’s regulatory architecture in order to ensure that the UK banking sector remains internationally competitive and is able to grow. This
has resulted in each of the financial services regulators setting out how they plan to improve growth in the sector. For example, the UK has delayed the
implementation of Basel 3.1 to 1 January 2027 in order to assess how it is implemented internationally. HMT also issued a call for evidence in November 2024 on
a new “Financial Services Growth & Competitiveness Strategy” that could result in changes to UK regulation, and since August 2023 the FCA has had a
secondary objective to facilitate the international competitiveness and growth of the UK economy.
As well as being subject to UK regulation, as part of the Banco Santander group, Santander UK is also affected by other regulators such as the Banco de
España (the Bank of Spain) and the European Central Bank (ECB), as well as various legal and regulatory regimes that have extra-territorial effect (most notably
the United States). Extensive legislation and regulations affecting the financial services industry have recently been adopted in regions that directly or indirectly
affect Santander UK’s business, including Spain, the US, the EU and other jurisdictions. Because Santander UK is subject to oversight by multiple regulators or
government bodies related to the same conduct or activity, this can increase business uncertainty and the amount of resources needed to ensure Santander
UK’s compliance with the different legal and regulatory regimes.
The manner in which financial services laws, regulations and policies are applied to the operations of financial institutions has gone through great change which
is still being implemented and reviewed. Recent proposals and measures taken by governmental, tax and regulatory authorities and further future changes in
supervision and regulation (in particular in the UK), are beyond Santander UK’s control and could materially affect Santander UK’s business. Santander UK may
face higher compliance costs and the need to carefully manage capacity to readily respond to multiple regulatory or government policy changes simultaneously.
Any legislative or regulatory actions and any required changes to Santander UK’s business operations resulting from such laws, regulations and policies as well
as any deficiencies in Santander UK’s compliance with them could result in significant loss of revenue, could have an impact on Santander UK’s strategy, limit its
ability to pursue business opportunities in which Santander UK might otherwise consider engaging, limit Santander UK’s ability to provide certain products and
services and/or result in enforcement action (including the imposition of financial and other penalties). They may also affect the value of assets that Santander UK
holds, requiring Santander UK to increase its prices thereby reducing demand for Santander UK’s products or otherwise have a material adverse effect on its
operations, financial condition and prospects. Accordingly, there can be no assurance that future changes in laws, regulations and policies or in their
interpretation or application by Santander UK or by regulatory authorities will not adversely affect Santander UK.
Specific examples where regulatory changes and increased regulatory scrutiny could have a material adverse effect on Santander UK’s operations, financial
condition and prospects include, but are not limited to:
–Banking Reform: In accordance with the provisions of the Financial Services (Banking Reform) Act 2013 UK banking groups that hold significant retail
deposits (originally more than £25 billion of “core deposits”), including Santander UK, were required to separate or ‘ring-fence’ their retail banking activities from
their wholesale banking activities by 1 January 2019. Santander UK completed its ring-fencing plans in advance of the legislative deadline of 1 January 2019.
However, given the complexity of the ring-fencing regulatory regime and the material impact on the way Santander UK conducts its business operations in the
UK, there is a risk that Santander UK and/or Santander UK plc may be found to be in breach of one or more ring-fencing requirements. This might occur, for
example, if prohibited business activities are found to be taking place within the ring-fence, mandated retail banking activities are found being carried on in a
UK entity outside the ring-fenced part of the group or Santander UK breached a PRA ring-fencing rule. If Santander UK were found to be in breach of any of
the ring-fencing requirements placed upon it under the ring-fencing regime, it could be subject to supervisory or enforcement action by the PRA, the
consequences of which might include substantial financial penalties, imposition of a suspension or restriction on Santander UK’s UK activities or, in the most
serious of cases, the forced restructuring of the UK group, entitling the PRA (subject to the consent of the UK Government) to require the sale of a Santander
ring-fenced bank or other parts of the UK group. Following the publication of the final report of the Independent Panel on Ring-Fencing and Proprietary Trading
on 15 March 2022, HMT announced its intention to implement certain limited reforms to the ring-fencing regime, including (i) increasing the ring-fencing core
deposit threshold from £25 billion to £35 billion, (ii) adding a new secondary ‘trading assets’ condition (exempting from the regime banks with trading assets
which do not exceed 10% of Tier 1 capital), (iii) introducing a de minimis threshold to allow ring-fenced banks to incur an exposure to relevant financial
institutions (RFIs) of up to £100,000 per RFI at any one time, and (iv) allowing ring-fenced banks to establish operations outside of the UK or the European
Economic Area, have exposure to RFIs that qualify as small and medium sized enterprises (SMEs) and undertake a wider range of activities such as market
standard trade finance activities or inflation swaps. These reforms entered into force on 4 February 2025 and may lead to further review or amendment of
Santander UK’s operational and compliance arrangements in relation to the regime. In July 2025, the UK Government announced that it was committed to
reforming the UK’s ringfencing rules, aimed at striking the balance between growth and stability. While such reforms could result in the relaxation of certain
aspects of the ring-fencing regime, the potential impact of the proposed reforms on the Santander UK group are not yet known.
–Competition: Competition authorities (which in the UK include the CMA, the FCA and the PSR) can run reviews and investigations into any aspect of
Santander UK’s operations or the functioning of any markets in which Santander UK operates, which could lead to Santander UK being required to change its
practices. In addition, the CMA’s widening focus on market outcomes may also result in increased reviews by the CMA of the markets in which Santander UK
operates. The recently passed Digital Markets, Competition and Consumers Act 2024 (DMCC) which came into force on 6 April 2025, has introduced
significant reforms to the powers of competition authorities in relation to the aforementioned investigations, including substantial new fining powers. The DMCC
also introduced other wide-ranging reforms to the UK’s competition, consumer protection and digital markets regulatory landscape some of which could impact
Santander UK’s business. For instance, the DMCC grants the CMA the power to directly determine whether certain consumer protection laws have been
infringed without needing to go through the courts.
–Payments: Santander UK has been required to make systems changes and update processes to comply with a number of new payment regulations. Within
the UK, the PSR has mandated Santander UK to work on the extension of Confirmation of Payee for all payment service providers (PSPs) in the UK and has
introduced a new APP mandatory reimbursement requirement which aims to reduce the level of customer fraud. Under these standards, Santander UK
assumes responsibility for certain categories of customer losses and any inherent failings in system design may lead to fines from regulators and/or
compensation being paid to customers. Santander UK also expects to see significant developments in the key UK payment systems architecture, with a
systems update of the high value Clearing House Automated Payment System (CHAPS) through the Real Time Gross Settlement (RTGS), BACS, the
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potential development of a UK central bank digital currency or similar system, and the development of Open Banking payments and other lower value retail
payment schemes. In 2024, the UK Government published its report on the “National Payments Vision”, which sets out its ambitions for the payments sector,
and is expected to generate a wider industry review. In November 2025, HMT, the FCA, the BoE, and the PSR published Strategy for Future of Retail
Payments Infrastructure, outlining five strategic outcomes for the future of the UK’s payments landscape in 2026. This will be followed by the Payments
Forward Plan, which will set out a comprehensive and sequenced roadmap for industry-wide payments initiatives. As demonstrated by other payments
initiatives, such as Open Banking and the second Payment Services Directive (PSD2), reforms in this space have the potential to exacerbate a number of
existing risks including data loss/data protection, cybersecurity, fraud and wider financial crime risk, which in turn could give rise to increased costs, litigation
risk and risk of regulatory investigation and enforcement activity.
–Data Privacy: In connection with its processing of personal data, Santander UK is subject to data protection laws and regulations – in particular, the UK GDPR
(as defined and interpreted in accordance with the Data Protection Act 2018) and the Data Protection Act 2018 (DPA). In the event Santander UK breaches
any such data protection laws, it could face significant enforcement action and/or financial penalties as well as reputational damage, which could ultimately
have a material adverse effect on Santander UK’s operations, financial condition and prospects.
–Cybersecurity: Santander UK is subject to cybersecurity regulations and cybersecurity incident reporting requirements. Cybersecurity incident reporting often
require short timeframes and there is a risk that Santander UK will fail to meet the reporting deadlines for any given cybersecurity incident. There will be legal,
reputational and regulatory risks in the event Santander UK, or the third-party providers Santander UK works with, are found to be out of compliance with these
regulations and reporting requirements
–Consumer Duty: The FCA’s rules and guidance on a broad consumer duty that firms undertaking regulated activities with retail clients must observe (the
Consumer Duty) have been in force for all products and services since 31 July 2024. The Consumer Duty has three elements: (i) a "Consumer Principle",
which reflects the overall standards of behaviour the FCA expects from firms (a firm must act to deliver good outcomes for retail customers), (ii) three cross-
cutting rules that articulate the standards of conduct expected under the Consumer Principle (firms must act in good faith towards retail customers, avoid
causing foreseeable harm to retail customers and enable and support retail customers to pursue their financial objectives), and (iii) four outcomes that build on
the Consumer Principle and cross-cutting rules, comprising a suite of rules and guidance setting more detailed expectations for a firm's conduct in four areas
that represent the key elements of the firm-consumer relationship (product design and governance, price and value, consumer understanding and consumer
support). The Consumer Duty requires firms to end unfair charges and fees, make it as easy to switch or cancel products as it was to take them out in the first
place, provide helpful and accessible customer support, act quickly to respond to customer queries, provide timely, clear and easily understandable information
to customers regarding products and services, provide products and services that are appropriate for their customers, and focus on the real and diverse needs
of their customers, including those in vulnerable circumstances, at every stage and in each interaction. The Consumer Duty also requires firms to monitor,
evidence and report against many of the requirements. Santander UK has fully implemented the Consumer Duty, which required a review of, and changes to,
Santander UK’s products, services, policies, systems and procedures against the FCA requirements. The Consumer Duty affects elements of Santander UK’s
business model and strategy, the products and services it offers and the pricing or costs of those products and services, which may in turn affect the revenue
and profits that Santander UK is able to generate. It may result in an increase in claims to the Financial Ombudsman Service (FOS) by customers alleging a
breach of the standards of the Consumer Duty or in regulatory action by the FCA. Santander UK will need to consider and navigate updated guidance and
expectations as the FCA continues to gain insight on firm's implementation of the Consumer Duty.
–Consumer redress: The FOS is the statutory body responsible for handling complaints by retail customers against regulated financial services firms. The
FOS is not bound to follow law or regulation when issuing decisions but rather must decide each complaint based on what is ‘fair and reasonable’ in the
circumstances. As a result, there can be a lack of clarity as to how the FOS will rule on a particular complaint, even where a firm believes that it has been
operating within legal and regulatory requirements. Further, while the FOS is not formally a precedent-setting body, in practice its decisions can set a
precedent, requiring firms to apply the reasoning given in one complaint to similar historic and future complaints. This means that the ramifications of a
particular complaint can extend well beyond the circumstances of the original complainant. The FOS is not bound by its past decisions and has the ability to
change its approach to cases, which can make it harder for firms to consistently address complaints. Together, these factors mean that Santander faces legal
and regulatory risk and uncertainty as a result of FOS decisions. The UK Government is reviewing the UK’s redress system particularly with respect to so-
called ‘mass redress events’ where there are large numbers of complaints about the same issue, most recently the FCA and FOS launched a joint consultation
to this effect in July 2025, which closed in October 2025.
–Outsourcing and Third-Party Risk Management: In March 2021, the PRA published Supervisory Statement 2/21 on outsourcing and third-party risk
management (SS2/21); these rules were updated in November 2024. SS2/21 is the primary source of reference for Santander UK when interpreting and
complying with its requirements on outsourcing and third-party risk management, although it should be read alongside the EBA guidelines on outsourcing
arrangements, and PRA and FCA rules and guidance on outsourcing. The scope of contracts required to meet the PRA requirements on outsourcing and third-
party risk management extends beyond that set out in the EBA guidelines on outsourcing and also captures material non-outsourcing. SS2/21 also requires
that intragroup outsourcing be subject to the same requirements and expectations as external outsourcing and should not be treated as being inherently less
risky. If Santander UK is unable to meet the PRA or FCA requirements on outsourcing and third-party risk management, it may face supervisory measures,
which could in turn have a material adverse effect on Santander UK’s operations, financial condition and prospects. In November 2024, the PRA and FCA
published a joint Policy Statement setting out their final rules for critical third parties. While Santander UK is not captured by the regime, Santander UK does
outsource services to companies that will be captured which may have an impact on Santander UK’s operations and financial condition.
–Operational Resilience: In March 2021, the PRA and the FCA published Supervisory Statement 1/21 (SS1/21) and Policy Statement 21/3 (PS21/3), which
set out their final rules and guidance intended to strengthen operational resilience in the financial services sector; these rules were amended in March 2022.
The operational resilience rules required Santander UK to establish processes to identify its ‘important business services’, being those services which, if
disrupted, could cause intolerable harm to clients or pose a risk to that firm’s safety and soundness or to the stability of the UK financial system. Santander UK
has identified these services and has set impact tolerances for all important business services and delivered a framework and processes to continually assess
its ability to remain within these tolerances in severe but plausible disruption scenarios. On an ongoing basis, if Santander UK is unable to meet the PRA and
FCA requirements relating to operational resilience, it may face supervisory measures, which could in turn have a material adverse effect on Santander UK’s
operations, financial condition and prospects.
–Climate Change: The UK Government is rolling out new sustainability disclosure requirements, which expand on those required under the TCFD framework,
including transition plans to align to net-zero, as well as a new UK green taxonomy, for example, there are additional requirements emerging from the PRA's
new rules on enhancing banks' and insurers' approaches to managing climate-related risks (within Policy Statement PS25/25 and Supervisory Statement
SS5/25, which repeal Supervisory Statement SS3/19). Santander UK Group Holdings plc is implementing the recommendations of TCFD on a group level:
further reporting will require additional gathering of data and digitalisation of reporting and there will be legal, reputational and regulatory risks should Santander
UK Group Holdings plc fail to adequately report, or to demonstrate appropriate capabilities to transition and support its customers to transition to a low carbon
economy.
–Access to Cash: FSMA 2023 grants the BoE supervisory powers to regulate the UK wholesale cash distribution market, including powers to impose fines and
empowers HMT to designate firms to be subject to FCA oversight for the purpose of ensuring the reasonable provision of cash access (including free cash
access). Santander UK has been designated by HMT for these purposes and accordingly has been subject to the FCA’s access to cash rules since September
2024. The access to cash regime is likely to have ongoing implications for Santander UK's business decisions and strategy, in particular in relation to
Santander UK's branch network and Santander UK's participation in the wholesale cash distribution market generally. In the event that the BoE imposes any
fines with respect to Santander UK’s participation in the wholesale cash distribution market or the FCA took enforcement action against Santander UK in
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relation to retail cash access, this could result in reputational damage and have a material adverse effect on Santander UK’s operations, financial condition and
prospects.
–Economic Crime: The UK financial crime legislative and regulatory framework has evolved significantly in recent years and remains subject to regular
change. Changes may occur through planned legislative or regulatory reform, including amendments to the Money Laundering, Terrorist Financing and
Transfer of Funds (Information on the Payer) Regulations 2017 (MLRs), reform of the UK’s anti-money laundering and counter-terrorist financing (AML/CTF)
supervisory framework, and wider reforms arising from the UK Government’s economic crime, fraud and anti-corruption strategies. Change may also occur
through reactive measures, such as including the significant expansion of the UK sanctions regime and associated enforcement efforts following the invasion of
Ukraine and other geopolitical tensions. As such, Santander UK may face higher compliance costs and risks and must carefully manage its capacity to respond
to multiple regulatory, legal and operational changes simultaneously. Any deficiencies in Santander UK’s compliance with such regulatory changes could result
in enforcement action including the imposition of financial or other penalties. Recent changes include commencement of the new failure to prevent fraud
offence on 1 September 2025, the Public Authorities (Fraud, Error and Recovery) Act 2025; and the Money Laundering and Terrorist Financing (Amendment)
Regulations 2026, which were made on 9 June 2026 and, subject to limited exceptions, came into force 21 days after on 30 June 2026. The 2026 Regulations
implement targeted amendments to the UK AML/CTF framework, including changes to customer due diligence, enhanced due diligence, treatment of high-risk
jurisdictions, pooled client accounts, cryptoasset businesses, regulatory scope, trust registration, information sharing and cooperation between AML/CTF
supervisors and other public bodies. While certain changes may support a more proportionate and risk-based approach, they will require updates to Santander
UK’s policies, procedures, systems, controls, training and assurance activity and may create short-term implementation and operational risk. In December
2025, the UK Government published the UK Anti-Corruption Strategy 2025, detailing its three-pillar approach to tackling corruption, based on: (i) corrupt actors,
(ii) tackling UK vulnerabilities, and (iii) global resilience. In March 2026, the UK Government also published the Fraud Strategy 2026-2029, which sets out a
multi-year programme to combat fraud against individuals and businesses, support economic resilience and improve the response to fraud across the public
and private sectors. Santander UK expects continued fraud related reform and public-private sector workstreams activity involving the financial services,
telecommunications and online sectors. The UK Government has also confirmed its intention to reform the AML/CTF supervisory framework by consolidating
supervision of professional services firms currently supervised by 22 professional body supervisors under the FCA’s oversight. This is being legislated for in the
Financial Services and Markets Bill currently in Parliament. Although Santander UK is already supervised by the FCA for AML/CTF purposes, this reform could
affect the wider UK financial crime control environment, including expectations around professional enablers, information sharing, system coordination and
FCA supervisory priorities. This may create indirect benefits through greater consistency in supervision, but may also create additional engagement,
implementation and cost pressures across the wider regulatory regime. The UK’s next Financial Action Task Force (FATF) Mutual Evaluation, will commence in
2026. As a result, we expect there will be legislative and regulatory changes perceived necessary to correct failings or issues identified in the 2018
assessment. The first of these, replacement of the need for court approval to issue an information order with empowerment of Authorised Officers to issue
them, is subject to a targeted engagement exercise by the Home Office. Santander UK assesses that this will have several immediate impacts, notably
operationally by increasing the number of information orders/notices we receive. Any expansion of civil or criminal liability under UK financial crime reforms
brings with it financial risk in the form of penalties and reputational risk, while continued compliance with the changing UK financial crime framework may
expose Santander UK to increased operational and compliance costs, each of which could in turn have a material adverse effect on Santander UK’s
operations, financial condition and prospects.
–Motor finance commission-related lending: Following the Supreme Court of the United Kingdom’s judgment in relation to three motor finance commission
cases, the FCA published a consultation on 7 October 2025 regarding a proposed industry-wide motor finance consumer redress scheme. On 30 March 2026,
the FCA published its Policy Statement PS26/3: Motor finance consumer redress scheme. There remain significant uncertainties as to the nature, extent and
timing of redress payments. The ultimate financial impact of the redress scheme could be materially higher or lower than the amount Santander UK has
recognised as a provision. While Santander UK did not challenge the scheme, it is monitoring legal challenges made by certain other lenders and a consumer
group. The implementation of the scheme is subject to the outcome of those proceedings with the hearing currently expected to take place before the Upper
Tribunal by Q1 2027. The timing of the final outcome remains uncertain and will depend on the Tribunal’s decision and any subsequent legal or regulatory
steps. As a result, the legal and regulatory outcomes, and the nature, extent and timing of any remediation action remain uncertain. Accordingly, Santander UK
remains subject to the risk of ongoing legal and regulatory uncertainty in relation to historical motor finance commission-based lending.
Santander UK is exposed to risk of loss and damage from civil litigation and/or criminal legal and regulatory proceedings
Santander UK faces various legal and regulatory issues that have given rise and may give rise to civil or criminal litigation, arbitration, and/or criminal, tax,
administrative and/or regulatory investigations, inquiries or proceedings. Failure to adequately manage the risks arising in connection with legal and regulatory
issues, including Santander UK’s obligations under existing applicable laws and regulations or its contractual obligations, including arrangements with its
customers and suppliers, or failure to properly implement applicable laws and regulations could result in significant loss or damage including reputational
damage, all of which could have a material adverse effect on Santander UK’s operations, financial condition and prospects.
Additionally, the current regulatory environment, with the continuing heightened supervisory focus, combined with the forthcoming regulatory change initiatives,
will lead to material operational and compliance costs. Relevant risks include:
–Regulators, agencies and authorities with jurisdiction over Santander UK, including the BoE, the PRA and the FCA, HMT, HM Revenue & Customs (HMRC),
the CMA, the Information Commissioner’s Office, the FOS, the PSR, the SFO, the National Crime Agency (NCA), the Office of Financial Sanctions
Implementation (OFSI) or the courts, may determine that certain aspects of Santander UK’s business have not been or are not being conducted in compliance
with applicable laws or regulations (or that policies and procedures are inadequate to ensure compliance), or, in the case of the FOS, with what is fair and
reasonable in the FOS’s opinion. Changes in policy, laws and regulations including in relation to SME dispute resolution and liability for APP fraud and
unauthorised payment fraud, may have significant consequences and lead to material implementation, operational and compliance costs.
–An adverse finding by a regulator, agency or authority could result in the need for extensive changes in systems and controls, business policies, and practices
coupled with suspension of sales, restrictions on conduct of business and operations, withdrawal of services, customer redress, fines and reputational damage.
–The increased focus on competition law in financial services and concurrent competition enforcement powers for the FCA and PSR may increase the likelihood
of competition law related inquiries or investigations initiated by either the CMA or these authorities. Santander UK may be liable for damages to third parties
harmed by Santander UK’s conduct of business. For competition law, there are efforts by governments across Europe to promote private enforcement as a
means of obtaining redress for harm suffered as a result of competition law breaches. Under the Consumer Rights Act 2015, there is scope for class actions to
be used to allow the claims of a whole class of claimants to be heard in a single action in both follow-on and standalone competition cases. The UK has seen a
sharp increase in recent years in the number of class action claims being issued in the Competition Appeals Tribunal on this basis. The tribunal has granted
certification for most cases that have reached the certification hearing stage to date, including cases that have presented novel competition law theories of
harm.
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–The alleged historical or current mis-selling of, or misconduct in relation to, financial products, including the alleged mis-selling of Payment Protection
Insurance, the alleged overcharging of interest, or alleged misconduct as a result of having sales practices and/or rewards structures that are deemed to have
been inappropriate, has given rise to and may in the future give rise to a risk of complaints to FOS and/or civil litigation (including claims management company
driven legal or complaints campaigns) (see Note 30 to the Consolidated Financial Statements for legal actions and regulatory matters). Such matters have
given rise to and may in the future give rise to the risk of regulatory enforcement action requiring Santander UK to amend sales processes, withdraw products
or provide restitution to affected customers, any of which may have a material adverse effect on Santander UK’s operations, require additional provisions to be
recorded in Santander UK’s financial statements and could adversely impact future revenues from affected products. For example, related to a judgment of the
Supreme Court of the United Kingdom (to which Santander UK was not a party), the FCA published Policy Statement PS26/3 establishing an industry-wide
consumer redress scheme. It is unclear whether the redress scheme will mitigate the risk of future complaints and / or civil litigation arising in the motor finance
context and from the Supreme Court’s judgment, particularly while legal challenges to the scheme remain ongoing, and there remains an increased risk of
complaints and / or civil litigation emerging from the Supreme Court judgment.
–Santander UK may have held and may continue to hold bank accounts for entities or have relationships with entities such as third parties that might be or are
subject to scrutiny from various regulators and authorities, including the SFO, the NCA and regulators in the US and elsewhere, which has led and could in the
future lead to Santander UK’s conduct being reviewed as part of any such scrutiny.
–Santander UK is (and will continue from time to time to be) subject to certain legal or regulatory investigations, inquiries and proceedings, both civil and criminal
including in connection with Santander UK’s lending and payment activities, treatment of customers, relationships with Santander UK’s employees, financial
crime, and other commercial or tax matters (see Note 30 to the Consolidated Financial Statements for legal actions and regulatory matters). These may be
brought against Santander UK under UK legal or regulatory processes, or under legal or regulatory processes in other jurisdictions, such as the EU and the
US, in circumstances where overseas regulators and authorities may have jurisdiction by virtue of its activities or operations.
–In view of the inherent difficulty of predicting the outcome of legal or regulatory proceedings, particularly where opportunistic claimants seek very large or
indeterminate damages, cases present novel legal theories, involve a large number of parties or are in the early stages of discovery, or where the approaches
of regulators or authorities to legal or regulatory issues and sanctions applied are subject to change, Santander UK cannot state with confidence what the
eventual outcome of any pending matters will be and any such pending matters are not disclosed by name because they are under assessment. Santander
UK’s provisions in respect of any pending legal or regulatory proceedings are made in accordance with relevant accounting requirements. These provisions are
reviewed periodically. However, in light of the uncertainties involved in such legal or regulatory proceedings, there can be no assurance that the ultimate
resolution of these matters will not exceed the provisions currently accrued by Santander UK. As a result, the outcome of a particular matter (whether currently
provided or otherwise) could have a material adverse effect on Santander UK’s operations, financial condition and prospects.
–The developing legal and regulatory regime in which Santander UK operates requires it to be compliant across all aspects of its business, including the training,
authorisation and supervision of personnel and the development of systems, processes and documentation. If Santander UK fails to be compliant with relevant
law or regulation, there is a risk of an adverse impact on its business from more proactive regulatory intervention (including by any overseas regulator which
establishes jurisdiction), investigation and enforcement activity leading to sanctions, fines, civil or criminal penalties, or other action imposed by or agreed with
the regulatory authorities, as well as increased costs associated with responding to regulatory inquiries and defending regulatory actions. Customers of
financial services institutions, including Santander UK’s customers, may seek redress if they consider that they have suffered loss for example as a result of the
misselling of a particular product, or through incorrect application or enforcement of the terms and conditions of a particular product or in connection with a
competition law infringement and Santander UK’s rights under a contract with its customers may in certain circumstances be unenforceable or otherwise
impaired.
–The Financial Services and Markets Act 2000 (Designated Consumer Bodies) Order 2013 (the Designated Consumer Bodies Order) was made on 16
December 2013 and came into force on 1 January 2014. The Designated Consumer Bodies Order designates the National Association of Citizens Advice
Bureaux, the Consumers’ Association, the General Consumer Council for Northern Ireland and the National Federation of Self Employed and Small
Businesses as consumer bodies that may submit a ‘super-complaint’ to the FCA. A ‘super-complaint’ is a complaint made by any of these designated
consumer bodies to the FCA on behalf of consumers of financial services where it considers that a feature, or a combination of features, of the market for
financial services in the UK is seriously damaging the interests of these customers. Complaints about damage to the interests of individual consumers will
continue to be dealt with by the FOS. If a ‘super-complaint’ were to be made against a Santander UK entity by a designated consumer body under the
Designated Consumer Bodies Order, any response published, or action taken by the FCA could have a material adverse effect on Santander UK’s operations,
financial condition and prospects.
Given the: (i) requirement for compliance with an increasing volume of relevant laws and regulations; (ii) more proactive regulatory intervention and enforcement
and more punitive sanctions and penalties for infringement; (iii) inherent unpredictability of litigation; (iv) evolution of the jurisdiction of FOS and CMA and related
impacts; (v) potential for the development of a voluntary dispute resolution service to oversee the resolution of complaints from SMEs that are outside the FOS’
jurisdiction; (vi) introduction of a voluntary code to enhance protection for customers who are victims of APP fraud; and (vii) high volume of new regulations or
policy changes from multiple regulators and authorities which Santander UK is mandated to implement within compressed timescales; it is possible that related
costs or liabilities could have a material adverse effect on Santander UK’s operations, financial condition and prospects.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
SANTANDER UK plc
By: | /s/ Angel Santodomingo | |
Angel Santodomingo | ||
Chief Financial Officer |
Dated: 07 August, 2026
Filing Exhibits & Attachments
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