Santander UK said it expects to make more “efficiencies” after its profit slipped in the first nine months of the year due to a drag from restructuring costs and motor finance costs.

The UK arm of Spain’s Banco Santander reported a £1.2bn pre-tax profit for the nine months ending 30 September, down six per cent on the same period last year.

It came despite net interest income jumping 17 per cent to £3.9bn following the addition of high street lender TSB, which Santander completed the purchase of in April. The unit has added £96m in pre-tax profit to Santander’s bottom line since its first inclusion in May.

But TSB also added £327m of operating costs and a £62m one-off ‘day one’ credit charge. Restructuring and specific provisions rose 269 per cent to £495m, from £134m a year earlier, weighing on profit for the year-to-date.

The largest named driver was a £179m increase in motor finance provisions, booked in the first quarter, taking the bank’s total provisions to £616m. 

Santander decided not to challenge the Financial Conduct Authority’s redress scheme earlier this year despite previously criticising the scheme. It added the outcome of any remediation remains uncertain while other challenges at the Upper Tribunal persist.

Santander to leverage automation

Higher restructuring and integration expenses also drove up costs after Santander transferred the first 1,000 TSB staff into its operation. The bank had kicked off a small round of redundancies earlier this year, expected to impact 33 staff.

“We expect further cost efficiencies in 2026, driven by simplification and automation of our business, and integration of TSB,” Santander said in its latest update.

The broader group recorded a €3.4bn profit for the third-quarter, down 2.4 per cent driven by M&A related impairments.

The lender struck a $12.2bn deal at the beginning of February to snap up US-based Webster Financial in a bid to ramp up its presence in the US.

The deal is expected to place Santander in the top-10 biggest retail and commercial banks in the US when measured by assets. Webster was valued at $75 a share in the deal with $48.75 in cash and the remainder in stock.

Santander said it completed the acquisition on 20 August, adding around €50bn of loans and €62bn of deposits to the group. 

“We made good progress this quarter, advancing the integration of TSB at pace and harnessing the strengths of both businesses to deliver the best for our customers,” Mahesh Aditya, chief executive, said.

“We also continued to deliver against our wider strategic priorities to deepen customer relationships and enhance operational efficiency, while leveraging Banco Santander’s global technology platforms and AI capabilities to provide the support our customers need.”