This slump was primarily driven by a substantial £179m provision charge related to historical motor finance commission payments. The additional charge followed the Financial Conduct Authority’s publication of its motor finance consumer redress scheme rules in March, bringing Santander’s total provision for the matter to £633m.

The bank’s profitability was further squeezed as its banking net interest margin contracted by eight basis points to 2.22%. This compression, caused by the higher cost of deposits, led to a 2% decrease in net interest income, which totalled £1.1 billion for the quarter.

Pressures were partially mitigated by a 7% reduction in operating expenses to £638m, which the bank attributed to its ongoing focus on simplification and automation.

Credit impairment charges rose to £73m, up from £52m a year earlier, as the lender downgraded its outlook for the UK economy due to heightened geopolitical risks and conflict in the Middle East.

In its updated base case scenario, Santander expects the UK economy to grow by only 0.5% in 2026, with unemployment forecast to reach 5.5%.

Chief executive Mahesh Aditya, who marks his first quarter in the role, said: “While we are not yet seeing any significant impact of the current uncertain global economic environment on our customers, we have put measures in place including a proactive outreach programme offering support, in addition to our ongoing commitment to the UK Mortgage Charter.”

Looking ahead, the completion of the TSB acquisition, following recent regulatory approval, is expected to complete imminently. The acquisition represents the single largest inward investment in the UK banking sector for over 15 years. The deal is expected to accelerate Santander UK’s transformation and enhance competition in the UK, benefiting both customers and shareholders.