The information contained in this
statement is unaudited and does not comprise statutory accounts
within the meaning of section 434 of the Companies Act 2006 ('the
Act'). The statutory accounts for the year ended 31 December 2023
have been filed with the Registrar of Companies. The report of the
auditor on those statutory accounts was unqualified, did not draw
attention to any matters by way of emphasis and did not contain a
statement under section 498(2) or (3) of the Act.
This
statement provides a summary of the unaudited business and
financial trends for the nine months ended 30 September 2024 for
Santander UK Group Holdings plc and its subsidiaries (Santander
UK), including its principal subsidiary Santander UK plc. The
unaudited business and financial trends in this statement only
pertain to Santander UK on a statutory basis. Unless otherwise
stated, references to results in previous periods and other general
statements regarding past performance refer to the business results
for the same period in 2023.
This
statement contains non-IFRS financial measures that are reviewed by
management in order to measure our overall performance and these
are outlined in the Appendix. A list of abbreviations is included
at the end of this statement and a glossary of terms is available
at:
https://www.santander.co.uk/about-santander/investor-relations/glossary
Santander UK Group Holdings plc
Quarterly Management Statement
for the nine months ended 30 September 2024
Santander UK Q3-24
results
During the third quarter 2024, profit before tax reduced to
£143m from £413m in the second quarter. Increased income from
active price management, and a steadily improving economic
environment were offset by a provision relating to historical motor
finance commission payments.
On
25 October the Court of Appeal published its judgment on disclosure
of dealer commissions on motor finance transactions. The Court of
Appeal decided that motor dealers acting as credit brokers owe
certain duties to their customers and set a higher bar for the
disclosure of and consent to the existence, nature, and amount of
commission paid to dealers than that required by current FCA rules,
or regulatory requirements in force at the time of the cases in
question. The lenders involved in the cases subject to the Court of
Appeal's judgment have indicated that they intend to seek
permission to appeal that judgment to the Supreme
Court.
In
light of the Court of Appeal judgment, we have recognised a
provision of £295m in our Q3-24 results. This includes estimates
for operational and legal costs and potential awards, based on
various scenarios using a range of assumptions. There are currently
significant uncertainties as to the nature, extent and timing of
any remediation action if required and the ultimate financial
impact could be materially higher or lower than the amount
provided.
The
CET1 capital ratio increased in the quarter to 15.4% despite the
impact of this provision, which was 19bps. We remain well
capitalised with significant buffers
over regulatory requirements.
9M-24 financial and business highlights
We
continued to help and support our customers
|
§
|
New mobile banking app has been well
received by customers, with both Android and Apple apps rated above
4.7 stars out of 5.
|
|
|
§
|
NPS1 ranked
4th for Retail, 4th for Corporate and
remained 1st for Business, reflecting our focus on
customer service.
|
|
|
§
|
Grew our CCB business with c.450 new
clients, providing connections to our global network to support
their UK and overseas growth.
|
Q3-24 profit before tax reduced to £143m (Q2-24:
£413m)
|
§
|
Q3-24 Banking NIM2 of
2.17% up 8bps QoQ, with net interest income improving following
active margin management.
|
|
§
|
Cost-to-income ratio2 of
52% improved 3pp, with higher income and lower costs.
|
|
§
|
Cost of risk2 of 5bps
(Jun-24: 8bps), with arrears remaining low.
|
|
§
|
Provisions for other liabilities and
charges increased with £295m provision relating to historical motor
finance commission payments3.
|
|
§
|
Delivered improvements from our
transformation programme, through simplifying our business and
automating processes.
|
First nine months profit before tax reduced to £947m (9M-23:
£1,731m)
|
§
|
9M-24 net interest income down 10%
YoY, largely due to higher customer deposit costs.
|
|
§
|
Operating expenses up 3%, following
further investment in efficiency and customer experience and two
years of high inflation.
|
|
§
|
Credit impairment charges down 53%,
given the improved economic outlook and removal of stubborn
inflation scenario.
|
|
§
|
Stage 3 ratio2 of 1.55%,
up 6bps from Dec-23, due to a smaller mortgage book and single name
cases in CCB at the start of the year.
|
|
§
|
RoTE2 of 8.7% (2023:
14.4%); strong capital with significant buffers over regulatory
requirements.
|
Customer loans and deposits reduced following further
disciplined pricing actions, with LDR of 109% (Dec-23:
108%)
|
§
|
While
mortgage loans reduced by £5.5bn since Dec-23, new business margins
and gross lending have improved.
|
|
§
|
Customer
deposits reduced by £7.9bn in 9M-24, mainly from savings outflows
after recent repricing actions.
|
Strong liquidity and capital, well above minimum
requirements
|
§
|
LCR of 157% (Dec-23: 162%) with
liquidity pool of £50.9bn (Dec-23: £50.9bn).
|
|
§
|
CET1 capital ratio increased 20bps
to 15.4% (Dec-23: 15.2%), despite the provision for historical
motor finance commission payments.
|
|
§
|
UK leverage ratio of 4.9% (Dec-23:
5.1%).
|
|
§
|
Stable and diversified wholesale
funding programmes.
|
Looking ahead
|
§
|
We intend to continue to prioritise
profitability and our core banking franchise through price
discipline and planned balance sheet optimisation, resulting in
lower mortgage lending and customer deposits in 2024.
|
|
§
|
Deposit pricing actions taken
improved Banking NIM2 further in Q3-24 and will provide
a tailwind over the coming quarters.
|
|
1.
|
See page 12
for more on NPS.
|
|
2.
|
Non-IFRS
measure. See Appendix for details.
|
|
3.
|
See Appendix
for more on historical motor finance commission
payments.
|
Income statement and balance sheet
|
Summarised consolidated income statement
|
|
|
|
|
|
9M-24
|
9M-23
|
Change
|
|
|
Q3-24
|
Q2-24
|
Change
|
|
|
£m
|
£m
|
%
|
|
|
£m
|
£m
|
%
|
|
Net interest income
|
3,201
|
3,561
|
(10)
|
|
|
1,096
|
1,052
|
4
|
|
Non-interest
income1
|
307
|
424
|
(28)
|
|
|
111
|
101
|
10
|
|
Total operating income
|
3,508
|
3,985
|
(12)
|
|
|
1,207
|
1,153
|
5
|
|
Operating
expenses2
|
(1,918)
|
(1,856)
|
3
|
|
|
(624)
|
(639)
|
(2)
|
|
Credit impairment (charges) /
write-backs
|
(95)
|
(204)
|
(53)
|
|
|
(35)
|
(41)
|
(15)
|
|
Provisions for other liabilities and
charges
|
(548)
|
(194)
|
182
|
|
|
(405)
|
(60)
|
575
|
|
Profit before tax
|
947
|
1,731
|
(45)
|
|
|
143
|
413
|
(65)
|
|
Tax on profit
|
(279)
|
(462)
|
(40)
|
|
|
(72)
|
(104)
|
(31)
|
|
Profit after tax
|
668
|
1,269
|
(47)
|
|
|
71
|
309
|
(77)
|
|
Banking NIM3
|
2.11%
|
2.23%
|
-12bps
|
|
|
2.17%
|
2.09%
|
8bps
|
|
CIR3
|
55%
|
47%
|
8pp
|
|
|
52%
|
55%
|
-3pp
|
Q3-24 profit before tax down 65% vs Q2-24
|
§
|
Net
interest income increased 4% QoQ following further active margin
management.
|
|
§
|
Non-interest income increased 10% largely due to lower
switcher fees paid to customers this quarter.
|
|
§
|
Operating
expenses2 down 2% following simplification and
automation.
|
|
§
|
Credit
impairment charges down 15% following
changes to our economic scenarios given
improved economic outlook.
|
|
§
|
Provisions
for other liabilities and charges up £345m, driven by a £295m
provision relating to historical motor finance commission payments,
as well as higher transformation costs and a provision relating to
a legacy tax issue from 20184.
|
9M-24 profit before tax down 45% vs 9M-23
|
§
|
Net
interest income down 10% YoY, largely due to higher customer
deposit costs.
|
|
§
|
Non-interest income down 28%, primarily due to the H1-23
revaluation gain of our shares in Euroclear which was not repeated
and lower operating lease income in Consumer Finance.
|
|
§
|
Operating
expenses2 up 3%, following further investment in
efficiency and customer experience and two years of high
inflation.
|
|
§
|
Credit
impairment charges down
53%, given the improved economic outlook
with lower unemployment and higher house prices now
expected.
|
|
§
|
Provisions
for other liabilities and charges up £354m, driven by a £295m
provision relating to historical motor finance commission payments,
as well as higher transformation costs and a provision relating to
a legacy tax issue from 20184.
|
|
§
|
Tax on
profit decreased 40%, reflecting the reduction in
profit.
|
|
Customer loans, customer deposits and wholesale
funding5
|
30.09.24
|
31.12.23
|
|
|
|
£bn
|
£bn
|
|
|
Customer loans
|
200.4
|
206.7
|
|
|
Customer deposits
|
185.7
|
193.6
|
|
|
Wholesale
funding3
|
58.6
|
58.0
|
|
|
|
|
|
| |
|
1.
|
Comprises 'Net fee and commission
income' and 'Other operating income'.
|
|
2.
|
Operating expenses before credit
impairment (charges) / write-backs, provisions for other
liabilities and charges.
|
|
3.
|
Non-IFRS measure. See Appendix for
details.
|
|
4.
|
See Appendix for information on
historical motor finance commission payments and legacy tax
issue.
|
|
5.
|
See Appendix for detailed balance
sheet.
|
Customer balance sheet analysis
|
Customer loans
|
30.09.24
|
|
31.12.23
|
|
|
Total
|
Stage 1
|
Stage 2
|
Stage
31
|
|
Total
|
Stage 1
|
Stage 2
|
Stage
31
|
|
|
£bn
|
%
|
%
|
%
|
|
£bn
|
%
|
%
|
%
|
|
Retail & Business
Banking
|
176.3
|
89.1
|
9.6
|
1.25
|
|
182.3
|
88.3
|
10.5
|
1.27
|
|
- Mortgages
|
169.7
|
89.4
|
9.5
|
1.15
|
|
175.2
|
88.5
|
10.4
|
1.16
|
|
- Credit Cards
|
2.6
|
79.8
|
18.2
|
3.39
|
|
2.7
|
85.4
|
12.9
|
2.95
|
|
- UPLs
|
2.2
|
90.5
|
8.1
|
1.47
|
|
2.1
|
84.4
|
14.3
|
1.32
|
|
- Overdrafts
|
0.4
|
49.8
|
42.5
|
8.82
|
|
0.5
|
43.9
|
50.1
|
6.73
|
|
- Business Banking
|
1.4
|
86.4
|
6.6
|
7.07
|
|
1.8
|
86.5
|
6.3
|
7.25
|
|
Consumer Finance
|
4.8
|
92.7
|
6.5
|
0.76
|
|
5.2
|
93.1
|
6.3
|
0.53
|
|
Corporate & Commercial
Banking
|
18.0
|
83.8
|
11.9
|
4.76
|
|
17.9
|
77.1
|
19.1
|
4.14
|
|
Corporate Centre
|
1.3
|
99.7
|
0.1
|
0.19
|
|
1.3
|
99.8
|
0.1
|
0.10
|
|
Total
|
200.4
|
88.8
|
9.7
|
1.55
|
|
206.7
|
87.5
|
11.1
|
1.49
|
|
Arrears over 90 days past due
%
|
Mortgages
|
Credit
cards
|
UPL
|
Overdrafts
|
Business
Banking
|
Consumer
Finance
|
CCB
|
|
30 September 2024
|
0.83
|
0.57
|
0.88
|
3.07
|
3.97
|
0.53
|
1.21
|
|
31 December 2023
|
0.80
|
0.51
|
0.73
|
2.43
|
4.15
|
0.43
|
1.04
|
Loans in Stage 2 compared to 2023 affected by SICR
changes
|
§
|
Loans in Stage 2 and 3 remain low
compared to historic trends although, as expected we have seen an
increase in arrears in 9M-24 as they return to more normalised
levels.
|
|
§
|
While
underlying asset quality remains good, we have seen an impact from
changes to our SICR criteria which were updated in Q2-24. This
increased Stage 2 loans for mortgages and credit cards, however the
impact on mortgages has been offset by the improvement in economic
outlook and removal of the Stubborn Inflation scenario reducing
Stage 2 accounts in Q3-24.
|
Prudent approach to risk evident across
portfolios
|
§
|
Mortgages:
average stock LTV of 51% (Dec-23: 51%) and average new loan size of
£242k (2023: £228k). Arrears from recent internal transfers remains
low, with less than 1% of customers entering arrears within 12
months.
|
|
§
|
Credit
Cards: 57% (2023: 55%) of customers repay full balance each month.
UPL: average customer balances £6k (2023: £6k). Overdrafts:
relatively small balance of £0.4bn, down from £0.5bn in
2023.
|
|
§
|
Business
Banking: includes £1.3bn (Dec-23: £1.7bn) of BBLS with 100%
Government guarantee.
|
|
§
|
Consumer
Finance: 93% (Dec-23: 87%) of lending is collateralised on the
vehicle.
|
|
§
|
CCB:
customers largely resilient to macro-economic and inflationary
pressures, with an uptick in watchlist and stage 3
exposures.
|
ECL
provision
|
§
|
ECL provision decreased by £52m to
£942m (2023: £994m) with a change in our
economic assumptions and weightings, including the removal of our
Stubborn Inflation scenario and the reweighting of the remaining
scenarios in Q3-24. Following the fall in inflation this year, we
also released £37m of judgemental adjustments which were originally
made to reflect cost of living pressures on customers.
|
|
§
|
Gross write-off utilisation of £154m
in 9M-24 largely driven by unsecured retail (9M-23: £149m; 12-month
2023: £232m).
|
|
Customer deposits
|
30.09.24
|
31.12.23
|
|
|
|
£bn
|
£bn
|
|
|
Retail & Business
Banking
|
151.4
|
158.3
|
|
|
- Current accounts
|
62.4
|
65.0
|
|
|
- Savings accounts
|
74.2
|
77.5
|
|
|
- Business banking
accounts
|
9.6
|
10.6
|
|
|
- Other retail products
|
5.2
|
5.2
|
|
|
Corporate & Commercial
Banking
|
23.3
|
24.1
|
|
|
Corporate Centre
|
11.0
|
11.2
|
|
|
Total
|
185.7
|
193.6
|
|
|
|
|
|
| |
|
1.
|
Non-IFRS measure. See Appendix
for details.
|
Economic scenarios and ECL
Economic scenarios were updated in Q3-24 to reflect latest
market data, including expectations for inflation and base
rate
|
§
|
Our Base Case reflects stronger economic growth
this year.
|
|
§
|
The Upside scenario incorporates a quicker
economic recovery.
|
|
§
|
Downside 1 and Downside 2 scenarios capture the
impact of continuing weaker investment, the increasing risk from
geopolitical events and the ongoing significant mismatch between
job vacancies and skills, as well as a smaller labour
force.
|
|
§
|
In Q3-24 we
removed the Stubborn Inflation scenario as inflation has returned
to more normalised levels. We intend to use four scenarios going
forward.
|
|
Economic
Scenarios 30 September 20241 (%)
|
Upside
|
Base
Case
|
Downside
1
|
Downside
2
|
Weighted
|
|
GDP
(calendar
year annual growth rate)
|
2024
|
1.2
|
1.1
|
0.7
|
-0.4
|
0.9
|
|
2025
|
2.1
|
1.4
|
-0.3
|
-3.3
|
0.6
|
|
2026
|
2.4
|
1.5
|
0.5
|
0.0
|
1.2
|
|
2027
|
2.4
|
1.4
|
0.7
|
1.4
|
1.4
|
|
2028
|
2.5
|
1.4
|
0.7
|
2.6
|
1.5
|
|
|
Start to
trough2
|
n.a.
|
n.a.
|
-0.7
|
-5.2
|
0.00
|
|
Base
rate
(At 31 December)
|
2024
|
4.50
|
4.75
|
5.00
|
4.00
|
4.70
|
|
2025
|
3.00
|
3.75
|
4.00
|
2.00
|
3.53
|
|
2026
|
3.00
|
3.50
|
3.25
|
1.50
|
3.16
|
|
2027
|
3.00
|
3.00
|
3.00
|
2.50
|
2.95
|
|
2028
|
3.00
|
3.00
|
3.00
|
2.75
|
2.98
|
|
|
5-year
Peak
|
5.00
|
5.00
|
5.00
|
5.00
|
5.00
|
|
HPI
(Q4 annual
growth rate)
|
2024
|
4.0
|
1.5
|
-1.1
|
-6.8
|
0.4
|
|
2025
|
4.8
|
2.5
|
-5.3
|
-17.8
|
-0.9
|
|
2026
|
4.6
|
3.0
|
-1.9
|
-9.9
|
1.1
|
|
2027
|
4.4
|
3.0
|
3.4
|
6.5
|
3.6
|
|
2028
|
4.3
|
3.0
|
3.7
|
8.4
|
3.8
|
|
Start to
trough2
|
n.a.
|
n.a.
|
-10.3
|
-32.7
|
-2.4
|
|
Unemployment
(At 31 December)
|
2024
|
4.4
|
4.6
|
4.6
|
5.2
|
4.6
|
|
2025
|
4.1
|
4.4
|
5.3
|
8.5
|
5.0
|
|
2026
|
4.0
|
4.2
|
5.4
|
7.9
|
4.8
|
|
2027
|
4.0
|
4.2
|
5.4
|
7.3
|
4.8
|
|
2028
|
4.0
|
4.2
|
5.5
|
6.6
|
4.7
|
|
5-year
Peak
|
4.4
|
4.6
|
5.6
|
8.5
|
5.0
|
|
CRE price
growth
(Q4 annual
growth rate)
|
2024
|
1.4
|
-0.3
|
-5.8
|
-4.0
|
-1.8
|
|
2025
|
2.9
|
1.9
|
-2.7
|
-13.2
|
-0.5
|
|
2026
|
2.4
|
2.3
|
2.7
|
-1.2
|
2.1
|
|
2027
|
2.1
|
2.1
|
4.0
|
4.0
|
2.7
|
|
2028
|
2.0
|
1.9
|
4.3
|
3.7
|
2.6
|
|
Start to
trough2
|
n.a.
|
n.a.
|
-8.3
|
-19.1
|
-1.8
|
|
Weight 30
September 2024
|
|
15%
|
50%
|
25%
|
10%
|
100%
|
|
Weight 30
June 20243
|
|
10%
|
50%
|
20%
|
10%
|
100%
|
|
Weight 31
December 20233
|
|
10%
|
50%
|
10%
|
10%
|
100%
|
|
ECL 30
September 2024
(100% weight to each scenario)
|
Upside
£m
|
Base
Case
£m
|
Downside
1
£m
|
Downside
2
£m
|
Weighted
£m
|
|
Retail
& Business Banking
|
406
|
427
|
533
|
1,035
|
495
|
|
Consumer
Finance
|
68
|
68
|
69
|
71
|
69
|
|
Corporate
& Commercial Banking
|
328
|
342
|
373
|
433
|
378
|
|
Total
|
802
|
837
|
975
|
1,539
|
942
|
|
|
|
|
1.
|
Our Q3-24 forecast used for ECL
calculation.
|
|
|
2.
|
GDP, HPI and CRE start is taken from
level at Q2-24.
|
|
|
3.
|
Stubborn Inflation scenario no
longer included in current scenarios, which had a 10% weight at 30
June 2024 and 20% at 31 December 2023.
|
|
Capital, liquidity and funding
|
Key
metrics
|
30.09.24
|
|
31.12.23
|
|
|
£bn
|
%
|
|
£bn
|
%
|
|
Capital
|
|
|
|
|
|
|
CET1 capital
|
10.3
|
15.4
|
|
10.5
|
15.2
|
|
Total qualifying regulatory
capital
|
14.4
|
21.4
|
|
14.8
|
21.4
|
|
T1 capital / UK leverage
ratio
|
12.4
|
4.9
|
|
12.5
|
5.1
|
|
RWA
|
67.2
|
-
|
|
69.1
|
-
|
|
Liquidity
|
|
|
|
|
|
|
LCR eligible liquidity pool /
LCR
|
50.9
|
157
|
|
50.9
|
162
|
|
Funding
|
|
|
|
|
|
|
LDR
|
-
|
109
|
|
-
|
108
|
|
Wholesale
funding1
|
58.6
|
-
|
|
58.0
|
-
|
|
- of which residual maturity less
than one year
|
12.7
|
-
|
|
11.9
|
-
|
Capital ratios well above regulatory
requirements
|
§
|
The CET1
capital ratio increased to 15.4% following the reduction in RWA
exposure from active balance sheet management, this was partially
offset by the provision relating to historical motor finance
commission payments.
|
|
§
|
UK leverage
exposure increased slightly to £249.9bn (Dec-23: £247.2bn) as a
result of optimisation of liquid assets.
|
|
§
|
We remain strongly capitalised with
significant headroom to minimum requirements and MDA.
|
Strong liquidity position
|
§
|
Strong LCR of 157% (Dec-23: 162%),
reduced following TFSME repayments in H1-24. LCR eligible liquid
assets surplus of £18.2bn to regulatory requirement. NSFR of 134%
(Dec-23: 138%).
|
|
§
|
LCR eligible liquidity pool of
£50.9bn (Dec-23: £50.9bn), includes £33.0bn cash and central bank
reserves (Dec-23: £38.4bn).
|
|
§
|
Term duration in the LCR eligible
liquidity pool is hedged with swaps to offset mark to market
movements from interest rate changes.
|
Diversified funding across
well-established issuance programmes
|
§
|
LDR of 109% (Dec-23: 108%), following
further disciplined pricing actions, with mortgage lending down
£5.5bn and customer deposits down £7.9bn.
|
|
§
|
Issued c.£8.0bn Sterling equivalent
medium-term funding in 9M-24, including Covered Bond, Senior
Unsecured and RMBS issuances in the third quarter.
|
|
§
|
£13.0bn in TFSME remaining, with
£9.1bn to be repaid by Oct-25 and remaining £3.9bn to be repaid
between 2027 and 2031.
|
Structural hedge
evolution
|
§
|
Santander UK plc's structural hedge
position increased, with c.£115bn at Sep-24 (Dec-23: c.£106bn), and
duration of c.2.4 years
(Dec-23: c.2.4 years). We are well positioned for expected bank
rate reductions.
|
|
1.
|
Non-IFRS measure. See Appendix for
details.
|
Appendix
a) Non-IFRS measures and their
calculations
|
§
|
Banking
NIM: Annualised net
interest income divided by average customer loans for the period.
(9M-24: £202,938m;
9M-23: £213,456m).
|
|
§
|
Cost of
risk: Sum of credit impairment (charges) or write-backs for the
last 12-month period as a percentage of average customer loans for
the last 12 months. (9M-24: £204,158m;
9M-23: £215,070m).
|
|
§
|
CIR: Total operating expenses before
credit impairment (charges) or write-backs, provisions and charges
as a percentage of the total of net interest income and
non-interest income.
|
|
§
|
Non-interest income: Net fee and commission income plus other
operating income.
|
|
§
|
Stage 3 ratio: Sum of Stage 3 drawn
and undrawn assets divided by the sum of total drawn assets and
Stage 3 undrawn assets.
|
|
§
|
RoTE: Annualised profit after tax
attributable to equity holders of the parent, divided by average
shareholders' equity less average AT1 securities and average
goodwill and other intangible assets.
|
|
§
|
Wholesale funding: Deposits by
customers reported in corporate centre, debt securities in issue,
subordinated debt, AT1 issuance and Central Bank facilities, TFSME
and indexed-long term repos used for funding.
|
Movement in Banking NIM
|
|
|
|
|
%
|
|
Q2-24 Banking NIM
|
|
|
|
2.09
|
|
Loan margins
|
|
|
|
-0.01pp
|
|
Deposit margins
|
|
|
|
+0.10pp
|
|
Funding, liquidity and
other
|
|
|
|
-0.01pp
|
|
Q3-24 Banking NIM
|
|
|
|
2.17
|
RoTE
calculation (£m)
|
|
|
|
9M-24
|
2023
|
|
Annualised profit after tax
|
|
|
892
|
1,596
|
|
Phasing adjustments
|
|
|
84
|
-
|
|
Profit due to equity holders of the parent
(A)
|
|
|
976
|
1,596
|
|
|
|
|
|
|
|
Average shareholders'
equity
|
|
|
14,905
|
14,839
|
|
Less average AT1
securities
|
|
|
(2,148)
|
(2,196)
|
|
Average ordinary shareholders' equity
|
|
|
12,757
|
12,643
|
|
Average goodwill and other intangible
assets
|
|
|
(1,536)
|
(1,549)
|
|
Average tangible equity (B)
|
|
|
11,221
|
11,094
|
|
|
|
|
|
|
|
RoTE
(A/B)
|
|
|
8.7%
|
14.4%
|
|
|
|
|
|
| |
b) Additional mortgage
information
|
|
|
|
30.09.24
|
31.12.23
|
|
Stock average
LTV1
|
|
|
51%
|
51%
|
|
New business average
LTV1
|
|
|
65%
|
66%
|
|
London lending new business average
LTV1
|
|
|
65%
|
65%
|
|
BTL proportion of loan
book
|
|
|
9%
|
9%
|
|
Fixed rate proportion of loan
book
|
|
|
89%
|
89%
|
|
Variable rate proportion of loan
book
|
|
|
8%
|
8%
|
|
SVR proportion of loan
book
|
|
|
2%
|
2%
|
|
FoR proportion of loan
book
|
|
|
1%
|
1%
|
|
Proportion of customers with a
maturing mortgage retained online2
|
|
|
77%
|
77%
|
|
Average loan size
(stock)3
|
|
|
£191k
|
£188k
|
|
Average loan size (new
business)
|
|
|
£242k
|
£228k
|
|
§
|
£81.9bn of
new business and internal transfers were priced in 2023 and 9M-24,
and by the end of the year a further £9bn will reach the end of
their incentive period.
|
c) Interest rate risk
|
12-month net interest income sensitivity4
(£m)
|
|
|
30.09.24
|
31.12.23
|
|
+100 bps
|
|
|
68
|
218
|
|
-100 bps
|
|
|
(73)
|
(220)
|
|
§
|
The table
above shows how our net interest income would be affected by a
100bps parallel shift (both up and down) applied instantaneously to
the yield curve. Sensitivity to parallel shifts represents the
amount of risk in a way that we think is both simple and
scalable.
|
d) Movement in CET1 capital
ratio
|
|
|
|
|
%
|
|
Dec-23 CET1 capital ratio
|
|
|
|
15.2
|
|
Profit
|
|
|
|
+1.0pp
|
|
Dividends and AT1 coupons
|
|
|
|
-1.0pp
|
|
Expected loss less provisions and
pension
|
|
|
|
-0.2pp
|
|
RWA and other
|
|
|
|
+0.4pp
|
|
Sep-24 CET1 capital ratio
|
|
|
|
15.4
|
|
1.
|
Balance
weighted LTV.
|
|
2.
|
Applied to
mortgages three months post maturity and is calculated as a
12-month average of retention rates to Jun-24 and Dec-23
respectively.
|
|
3.
|
Average
initial advance of existing stock.
|
|
4.
|
Based on
modelling assumptions of repricing behaviour.
|
e) Regulatory capital
requirements
|
Regulatory headroom (£bn)
|
CET1
capital
|
UK leverage
|
Total
capital
|
MREL
|
|
Sep-24 position
|
10.3
|
12.4
|
14.4
|
24.2
|
|
Minimum requirement
|
7.5
|
10.7
|
11.1
|
19.9
|
|
Distance to MDA / excess
|
2.8
|
1.7
|
3.3
|
4.3
|
|
|
|
|
|
|
|
Regulatory headroom (%)
|
CET1
capital
|
UK leverage
|
Total
capital
|
MREL
|
|
Sep-24 position
|
15.4
|
4.9
|
21.4
|
36.0
|
|
Minimum requirement
|
11.2
|
4.3
|
16.5
|
29.5
|
|
Distance to MDA / excess
|
4.2
|
0.6
|
4.9
|
6.5
|
|
Minimum requirement breakdown (%)
|
CET1
capital
|
UK leverage
|
Total
capital
|
MREL
|
|
- Pillar 1
|
4.5
|
-
|
8.0
|
-
|
|
- Pillar 2A
|
2.3
|
-
|
4.1
|
-
|
|
- Capital conservation
buffer
|
2.5
|
-
|
2.5
|
2.5
|
|
- Countercyclical capital
buffer
|
1.9
|
0.7
|
1.9
|
1.9
|
|
- Base leverage
|
-
|
3.3
|
-
|
-
|
|
- Leverage (6.75%
leverage)
|
-
|
-
|
-
|
25.1
|
|
- Systemic (O-SII requirements for RFB)
|
-
|
0.3
|
-
|
-
|
|
Minimum requirement
|
11.2
|
4.3
|
16.5
|
29.5
|
|
§
|
Distance to
MDA / excess for CET1 capital, total capital and MREL ratios are
measured on HoldCo requirements and excludes a 1.0% RFB systemic
buffer.
|
f) Wholesale funding
(£bn)
|
|
|
|
Sep-24
|
Dec-23
|
|
TFSME
|
|
|
13.0
|
17.0
|
|
Covered Bonds
|
|
|
17.6
|
14.8
|
|
RMBS and ABS
|
|
|
4.0
|
2.8
|
|
Senior Unsecured issuance from
Santander UK plc
|
|
|
1.6
|
2.1
|
|
Senior Unsecured issuance from
Santander UK Group Holdings plc
|
|
|
10.6
|
11.5
|
|
Medium term funding
|
|
|
46.8
|
48.2
|
|
|
|
|
Sep-24
|
Dec-23
|
|
Subordinated Debt
|
|
|
2.2
|
2.2
|
|
AT1
|
|
|
2.1
|
2.2
|
|
Capital instruments
|
|
|
4.3
|
4.4
|
|
|
|
|
Sep-24
|
Dec-23
|
|
Medium term funding
|
|
|
46.8
|
48.2
|
|
Capital instruments
|
|
|
4.3
|
4.4
|
|
Short term funding
|
|
|
7.5
|
5.4
|
|
Wholesale funding
|
|
|
58.6
|
58.0
|
g) Balance sheet information
(£bn)
|
|
|
|
Sep-24
|
Dec-23
|
|
Customer loans
|
|
|
200.4
|
206.7
|
|
Loans to JVs, accrued interest, ECL
and other
|
|
|
5.2
|
4.5
|
|
Loans and advances to customers
|
|
|
205.6
|
211.2
|
|
Cash at central banks
|
|
|
33.9
|
40.5
|
|
Reverse repurchase
agreements
|
|
|
16.1
|
12.5
|
|
Other financial assets
|
|
|
13.7
|
11.9
|
|
Other assets - non-interest
earning
|
|
|
5.6
|
6.0
|
|
Total assets
|
|
|
274.9
|
282.1
|
|
|
|
|
|
|
|
|
|
|
Sep-24
|
Dec-23
|
|
Customer deposits
|
|
|
185.7
|
193.6
|
|
Deposits from JVs, accrued interest
and other
|
|
|
2.2
|
1.5
|
|
Deposits by customers
|
|
|
187.9
|
195.1
|
|
Financial liabilities at amortised
cost
|
|
|
56.5
|
58.5
|
|
Repurchase agreements
|
|
|
10.3
|
8.4
|
|
Other liabilities - non-interest
earning
|
|
|
5.4
|
5.1
|
|
Total liabilities
|
|
|
260.1
|
267.1
|
|
Shareholders' equity
|
|
|
14.8
|
15.0
|
|
Total liabilities and equity
|
|
|
274.9
|
282.1
|
h) Historical motor finance commission
payments
Following the FCA's Motor Market
review in 2019 which resulted in a change in rules in January 2021,
Santander Consumer (UK) plc (SCUK) has received a number of county
court claims and complaints in respect of its historical use of
discretionary commission arrangements (DCAs) prior to the 2021 rule
changes. In January 2024, the FCA commenced a review of the use of
DCAs between lenders and credit brokers (the FCA review) and paused
the handling of these complaints originally until September 2024.
The FCA announced in July 2024 that it expected to share the
outcome of its Review by May 2025 and that the pause in respect of
handling of these complaints was extended to 4 December 2025. A
claim has also been issued against SCUK, Santander UK plc and
others in the Competition Appeal Tribunal (CAT), alleging that
SCUK's historical DCAs in respect of used car financing operated in
breach of the Competition Act 1998. This is currently paused until
the end of July 2025 connected to the outcome of the FCA
Review.
The outcome of the FCA's Review may
be informed by the judgment of the Court of Appeal handed down on
25 October 2024 in relation to cases against other lenders
involving DCAs (noting that the lenders subject to the Court of
Appeal's judgment have indicated they intend to seek permission to
appeal), and the outcome of a judicial review of a final decision
by the Financial Ombudsman Service (FOS) against another lender
that was heard in October 2024.
In light of the Court of Appeal
judgment, the Santander UK Group has recognised a provision of
£295m in its financial results for the quarter ended 30 September
2024. This includes estimates for operational and legal costs
(including litigation costs) and potential awards, based on various
scenarios using a range of assumptions (such as the outcome of any
Supreme Court appeal, the scope and timeframe of any redress
scheme, applicable time periods, claims rates and compensatory
interest rates). The outcome of the FCA's Review and/or adverse
outcomes from litigation could result in material costs. These
matters mean that there are currently significant uncertainties as
to the extent of any misconduct, if any, as well as the perimeter
of commission models, nature, extent and timing of any remediation
action if required. As such, the ultimate financial impact could be
materially higher or lower than the amount provided and it is not
practicable to quantify the extent of any remaining contingent
liability.
i) Legacy tax
issue
A provision of £14m was taken in
Q3-24 by Santander Financial Services plc (SFS) in relation to a
dispute with an overseas tax authority concerning the tax treatment
of legacy equity related transactions when SFS was trading as
Santander Corporate and Investment Banking in 2018. In addition to
this provision there was an associated increase in interest and
related costs on the tax liability of £16m.
List of abbreviations
|
AT1
|
Additional Tier 1
|
|
Banco Santander
|
Banco Santander, S.A.
|
|
Banking NIM
|
Banking Net Interest Margin
|
|
BBLS
|
Bounce Back Loan Scheme
|
|
BTL
|
Buy-To-Let
|
|
CCB
|
Corporate & Commercial Banking
|
|
CET1
|
Common Equity Tier 1
|
|
CIB
|
Corporate & Investment Banking
|
|
CIR
|
Cost-to-Income Ratio
|
|
CRE
|
Commercial Real Estate
|
|
ECL
|
Expected Credit Losses
|
|
FoR
|
Follow on Rate
|
|
FCA
|
Financial Conduct Authority
|
|
FSCS
|
Financial Services Compensation Scheme
|
|
GDP
|
Gross Domestic Product
|
|
HoldCo
|
Holding Company (Santander UK Group Holdings plc)
|
|
HPI
|
House Price Index
|
|
IFRS
|
International Financial Reporting Standards
|
|
JA
|
Judgemental Adjustment
|
|
LCR
|
Liquidity Coverage Ratio
|
|
LDR
|
Loan-to-Deposit Ratio
|
|
LTV
|
Loan-To-Value
|
|
MDA
|
Maximum Distributable Amount
|
|
n.a.
|
Not applicable
|
|
NPS
|
Net Promoter Score
|
|
NSFR
|
Net Stable Funding Ratio
|
|
O-SII
|
Other Systemically Important Institutions
|
|
PD
|
Probability of Default
|
|
PRA
|
Prudential Regulation Authority
|
|
QoQ
|
Quarter-on-quarter
|
|
RFB
|
Ring-fenced Bank
|
|
RoTE
|
Return on Tangible Equity
|
|
RMBS
|
Residential Mortgage-Backed Securities
|
|
RWA
|
Risk-Weighted Assets
|
|
Santander UK
|
Santander UK Group Holdings plc
|
|
SFS
|
Santander Financial
Services
|
|
SICR
|
Significant Increase in Credit
Risk
|
|
SONIA
|
Sterling Overnight Index Average
|
|
SVR
|
Standard Variable Rate
|
|
TFSME
|
Term Funding Scheme with additional incentives for
SMEs
|
|
UK
|
United Kingdom
|
|
UPL
|
Unsecured personal loans
|
Retail NPS: NPS ranked
4th for Retail
Our customer experience research was
subject to independent third party review. We measured the main
banking NPS of 16,954 consumers on a six month basis using a
11-point scale (%Top 2 - %Bottom 7). The reported data is based on
the six months ended 30 September 2024, and the competitor set
included in the ranking analysis is Barclays, Halifax, HSBC, Lloyds
Bank, Nationwide, NatWest Group (NatWest & RBS) and TSB.
Sep-24: NPS ranked 4th for Retail, we note a margin of
error which impacts those from 2nd to 5th and
makes their rank statistically equivalent.
Sep-23: NPS ranked 5th
for Retail, we note a margin of error which impacts those from
3rd to 5th and makes their rank statistically
equivalent.
Corporate NPS: NPS ranked
4th for Corporate
Corporate NPS is measured by the
MarketVue Business Banking from Savanta. This is an ongoing
telephone based survey designed to monitor usage and attitude of UK
businesses towards banks. 14,500 structured telephone interviews
are conducted each year among businesses of all sizes from new
start-ups to large corporates. The data is based upon 2,466
interviews made in twelve months ended 18 September 2024 with
businesses turning over from £2.1m - £500m per annum and are
weighted by region and turnover to be representative of businesses
in Great Britain. NPS recommendation score is based on an 11-point
scale (%Top 2 - %Bottom 7). The competitor set included in this
analysis is Barclays, HSBC, Lloyds Banking Group and NatWest
Group.
Sep-24: NPS ranked 4th
for Corporate.
Sep-23: NPS ranked 2nd
for Corporate.
Business NPS: NPS ranked
1st for Business
Business NPS is measured by the
MarketVue Business Banking from Savanta. This is an ongoing
telephone based survey designed to monitor usage and attitude of UK
businesses towards banks. 14,500 structured telephone interviews
are conducted each year among businesses of all sizes from new
start-ups to large corporates. The data is based upon 6,105
interviews made in twelve months ended 18 September 2024 with
businesses turning over from £0 - £2m per annum and are weighted by
region and turnover to be representative of businesses in Great
Britain. NPS recommendation score is based on an 11-point scale
(%Top 2 - %Bottom 7). The competitor set included in this analysis
is Barclays, RBS, HSBC, Lloyds Bank and NatWest.
Sep-24: NPS ranked 1st for Business.
Sep-23: NPS ranked 1st
for Business.
Additional information about Santander UK and Banco
Santander
Santander UK is a financial services provider in the
UK that offers a wide range of personal and commercial financial
products and services. At 30 September 2024, the bank had around
19,200 employees and serves around 14 million active customers,
including 7 million digital customers via a nationwide 444 branch
network, telephone, mobile and online banking. Santander UK is
subject to the full supervision of the FCA and the PRA in the UK.
Santander UK plc customers' eligible deposits are protected by the
FSCS in the UK.
Banco Santander (SAN SM, STD
US, BNC.LN) is a leading commercial bank, founded
in 1857 and headquartered in Spain and one of the largest banks in
the world by market capitalization. The group's activities are
consolidated into five global businesses: Retail & Commercial
Banking, Digital Consumer Bank, Corporate & Investment Banking
(CIB), Wealth Management & Insurance and Payments (PagoNxt and
Cards). This operating model allows the bank to better leverage its
unique combination of global scale and local leadership. Banco
Santander aims to be the best open financial services platform
providing services to individuals, SMEs, corporates, financial
institutions and governments. The bank's purpose is to help people
and businesses prosper in a simple, personal and fair way. Banco
Santander is building a more responsible bank and has made a number
of commitments to support this objective, including raising €220
billion in green financing between 2019 and 2030. In the first nine
months of 2024, Banco Santander had €1.3 trillion in total funds,
171 million customers, 8,100 branches and 208,000
employees.
Banco Santander has a listing of its ordinary shares
on the London Stock Exchange and Santander UK plc has preference
shares listed on the London Stock Exchange.
None of the websites referred to in this Quarterly
Management Statement, including where a link is provided, nor any
of the information contained on such websites is incorporated by
reference in this Quarterly Management Statement.
Disclaimer
Santander UK Group Holdings plc
(Santander UK) and Banco Santander caution that this announcement
may contain forward-looking statements. Such forward-looking
statements are found in various places throughout this
announcement. Words such as "believes", "anticipates", "expects",
"intends", "aims" and "plans" and other similar expressions are
intended to identify forward-looking statements, but they are not
the exclusive means of identifying such statements. Forward-looking
statements include, without limitation, statements concerning our
future business development and economic performance. These
forward-looking statements are based on management's current
expectations, estimates and projections, and Santander UK and Banco
Santander caution that these statements are not guarantees of
future performance. We also caution readers that a number of
important factors could cause actual results to differ materially
from the plans, objectives, expectations, estimates and intentions
expressed in such forward-looking statements. We have identified
certain of these factors in the forward-looking statements on page
255 of the Santander UK Group Holdings plc 2023 Annual Report.
Investors and others should carefully consider the foregoing
factors and other uncertainties and events. Undue reliance should
not be placed on forward-looking statements when making decisions
with respect to Santander UK, Banco Santander and/or their
securities. Such forward-looking statements speak only as of the
date on which they are made, and we do not undertake any obligation
to update or revise any of them, whether as a result of new
information, future events or otherwise. Statements as to
historical performance, historical share price or financial
accretion are not intended to mean that future performance, future
share price or future earnings for any period will necessarily
match or exceed those of any prior quarter.
Santander UK is a frequent issuer in
the debt capital markets and regularly meets with investors via
formal roadshows and other ad hoc meetings. In line with Santander
UK's usual practice, over the coming quarter it expects to meet
with investors globally to discuss this Quarterly Management
Statement, the results contained herein and other matters relating
to Santander UK.
Nothing in this announcement
constitutes or should be construed as constituting a profit
forecast.
