TSB’s earnings in robust shape ahead of Santander takeover

High street banking giant TSB has reported annual profits jumping more than a fifth higher as it awaits completion of its near-£3 billion takeover by rival Santander.

The group said pre-tax profits rose 20.7% to £350.4 million for 2025 as costs fell and its income rose, but loans to customers fell 0.2% to £36.3 billion in a “challenging lending market”.

TSB announced late on Thursday that chief executive Marc Armengol will step down to head up its Spanish owner, Sabadell.

The move is set to coincide with TSB being bought by its bigger rival Santander, which the firms expect to happen during the first half of this year, with Mr Armengol taking on the new job after May.

Mr Armengol said 2025 was an “extraordinary year for TSB” and praised a “record financial performance”.

It is unclear if the TSB brand will remain after the takeover by Santander, with its Spanish-owner buyer yet to make up its mind.

The deal valued TSB at £2.65 billion but the sale price is estimated to rise to £2.9 billion once the transaction completes, which is waiting for regulatory approval.

There are also fears over job cuts and branch closures across the combined group after the deal.

Santander last week said it was closing another 44 branches across the UK, which will leave it with 244 full branches before the TSB integration.

TSB, the UK’s 11th largest mortgage lender, has around 175 branches across the UK and employs more than 5,000 people.

It said operating expenses reduced by 4.4% to £786 million last year thanks to a tight rein on costs and efforts to streamline the business.

The group said customer deposits remained largely flat, up 0.5% to £35.2 billion, though fixed rate deals helped savings balances rise 2.3%.

TSB said: “UK 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.”