Santander UK reports reduced annual profit amid strategic shifts

LONDON - Santander (BME:SAN) UK Group Holdings PLC announced a decrease in profit before tax for the year ended December 31, 2024, to £1,330 million, down from £2,149 million in the previous year. The bank attributed the 38% decline primarily to a charge for historical motor finance commission payments and higher customer deposit costs. Despite these challenges, the bank maintained strong liquidity and a Common Equity Tier 1 (CET1) capital ratio of 14.8%.

The bank’s Chief Executive Officer, Mike Regnier, highlighted the progress made in strategic priorities, including enhancements to digital services and product offerings, which he believes positions the bank well for future improvements in mortgage margins and funding costs. The bank’s OneApp has attracted six million users, and credit card openings increased by 42%, with the Edge credit card offering contributing significantly to this growth.

In the fourth quarter of 2024, Santander UK saw an increase in profit before tax to £383 million, compared to £143 million in the previous quarter. This improvement was due in part to an 8 basis point increase in Banking Net Interest Margin (NIM) and active margin management. However, the cost-to-income ratio increased by 4 percentage points quarter-on-quarter, largely because of the loss on the sale of a low return mortgage portfolio.

The bank also reported a reduction in customer loans and deposits, which was a result of planned balance sheet optimization. Mortgage loans decreased by £8.0 billion and customer deposits by £10.2 billion in 2024. The bank’s liquidity coverage ratio (LCR) stood at 156%, with a liquidity pool of £47.8 billion.

Looking ahead, Santander UK anticipates a gradual return to net lending growth in 2025, with expectations of continued tailwinds from pricing actions to net interest income and Banking NIM. The bank also expects its cost of risk to trend towards more normalized levels following a period of expected credit loss (ECL) write-backs in 2024.

This financial overview is based on a press release statement by Santander UK Group Holdings PLC.

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