Santander UK has warned of further cost-cutting over the year ahead, despite a hike in annual profits. The Spanish-owned lending giant reported a 14% rise in pre-tax profits to £1.51 billion for 2025.

The increase comes even with the additional provision for motor finance compensation and costs, on top of £295 million for the saga in 2024, having earlier cancelled third-quarter results to assess the impact of the Financial Conduct Authority’s redress scheme. But the bank cautioned, “there continue to be significant uncertainties as to the nature, extent and timing of redress payments”. It added: “The ultimate financial impact could be materially higher or lower than the amount provided.”

In full-year results, it also set the scene for more cost-cutting in 2026, less than a week after it revealed plans to shut another 44 branches, putting nearly 300 jobs at risk.

Santander said it expects further cost efficiencies in 2026, “driven by simplification and automation of our business”.

It said it expects to complete the £2.65 billion TSB deal in the first half of 2026.

The UK bank results came after its Spanish owner, Banco Santander, announced a 12.2 billion US dollar (£8.9 billion) deal to buy American rival Webster Bank.

Banco Santander reported a better-than-expected net income of 3.76 billion euros (£3.24 billion) for the fourth quarter, having brought the results forward by a day due to the announcement of the deal.