Meanwhile, its mortgage loan book stayed flat quarter-to-quarter at £167.2bn.
The proportion of mortgage accounts more than 90 days in arrears fell slightly from 0.8% at the end of 2024 to 0.77% as of 31 March this year.
The average loan-to-value (LTV) tier of its mortgage book was flat at 51%, while the average LTV of new business contracted marginally from 64% to 63%.
Its net interest margin improved by 23 basis points to 2.3%, which it said built on the momentum seen in the sector half of Q4 2024, which was at 2.25%. Santander UK’s net interest income rose 6% to £1.12bn.
The bank reported an 8% fall in its profit before tax to £358m in Q1, partially attributed to changes in its branch network, which resulted in an expense of £21m.
Industry, not regulation, must lead later life lending change
Sponsored by Suffolk Building Society Intermediaries
Mike Regnier, chief executive of Santander UK, said: “We carried good momentum from 2024 into Q1 2025 as we continued to make progress on our strategic priorities. As part of this, we evolved our products and services to meet our customers’ changing behaviours and needs, including becoming the first major lender to change our assessments of how much customers can afford to pay towards a mortgage, allowing them to borrow more.
“The progress we are making drove improved business performance in the first quarter, with an increase in net interest income and a reduction in operating expenses. However, charges relating to changes to our branch network resulted in a lower profit before tax of £358m for the quarter.
“Looking ahead, we will look to build on our positive momentum and will continue to work closely with Banco Santander to ensure that we harness the benefits of being part of a global business.”
