TSB reported record annual profits for 2025 ahead of the near £3billion takeover by Santander expected later this year.
The high street bank said pre-tax profits rose 20.7 per cent to £350.4million for 2025, driven by cutting costs and a 3.6 per cent rise in income.
It said it had cut operating expenses by 4.4 per cent to £786million to ‘further simplify the business’ before the deal with Santander completes.
But loans to customers fell 0.2 per cent to £36.3billion in a ‘challenging lending market’, while customer deposits were also broadly flat at £35.2billion.
The bank’s net interest margin – the difference between generated and paid interest– was up from 2.68 per cent in 2024 to 2.89 per cent in 2025.
TSB announced on Thursday that chief executive Marc Armengol will leave TSB for its Spanish owner Sabadell, ahead of the Santander takeover.
Santander’s TSB takeover is expected later this year and will create the UK’s 3rd largest bank
Armengol said 2025 was an ‘extraordinary year for TSB’ after a ‘record financial performance.’
Questions remain whether the takeover, which is expected in the first half of this year, will retain TSB’s brand and presence on the high street.
Last week, Santander announced 44 further branch closures, leaving it with 244 full branches ahead of the TSB deal.
In its results this week, Santander indicated that the motor finance scandal continued to hamper its progress in the UK, with profit broadly flat at €1.3billion (£1.5bn).
Mike Regnier, chief executive of Santander UK said: ‘The most significant change in 2026 is expected to be the acquisition of TSB, for which we hope to receive regulatory approval in the first half of the year.
‘This landmark acquisition will create the UK’s third-largest bank by personal current account balances, enhancing the profitability of Santander UK and creating stronger competition and choice for customers.’
TSB is the UK’s eleventh largest mortgage lender and has around 175 branches and employs more than 5,000 people.
It said mortgage completions increased by 9.5 per cent between 2024 and 2025, while lending increased by 6 per cent.
However, it warned that consumers ‘remain cautious, yet resilient, in an uncertain economic environment.
‘Unemployment increased in 2025 and economic growth has weakened, but the housing market remains stable and lower inflation is expected to pave the way for further base rate cuts in 2026.’
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