TSB’s profit soars ahead of Santander takeover
Profit at high street lender TSB soared in the latest financial year as the bank slashed costs ahead of its landmark takeover by Santander.
TSB’s pre-tax profit hit £350.4m in 2025, a 20.7 per cent jump from the year prior. The growth was fuelled by rising income streams and falling costs, even as the bank navigated a difficult lending market.
Total income rose 3.6 per cent to £1.2bn, with the bank’s structural hedge serving as the bigger driver. Banks use hedges to reduce the volatility of their earnings by investing stable customer deposits into medium-to-long-term instruments.
When older hedge maturities occur, they are replaced with new ones throughout the year, which has benefited TSB due to the current higher interest rates.
As a result, TSB’s net interest margin, a key measure of a bank’s profitability, climbed to 2.89 per cent from 2.68 per cent.
TSB heading for leadership shakeup
TSB also took the chop to operational costs, reducing expenses by 4.4 per cent to £786m.
The bank said it implemented simplification projects, including technological upgrades and more efficient digital journeys for customers. This caused TSB’s cost-to-income ratio to drop sharply from 66.4 per cent to 71.9 per cent, meaning the bank was spending less to earn every pound of revenue.
The full-year earnings update marks the final update from TSB ahead of a major leadership change, with the bank’s boss, Marc Amrengol, set to take up the role of chief executive of the bank’s parent company, Sabadell.
Sabadell announced the sale of TSB to its Spanish banking peer Santander in a blockbuster £2.6bn deal.
TSB will add five million customers, £34bn in mortgages and £35bn in deposits to Santander’s portfolio, as well as its 218 branches. But the deal has sparked fears that it would lead to TSB’s total disappearance from the high street due to Santander’s aggressive strategy of shuttering branches.
Armengol will continue to lead TSB until the completion of the acquisition, expected in the first half of 2026, with the board expected to provide further updates on the role closer to that time.