TIDM95VC TIDMBN65
RNS Number : 1629R
Santander UK Group Holdings PLC
25 October 2023
The information contained in this report 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 2022 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 report provides a summary of the unaudited business and
financial trends for the nine months ended 30 September 2023 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 (the statutory
perimeter). 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
2022.
This report contains non-IFRS financial measures that are
reviewed by management in order to measure our overall performance.
These are financial measures which management believe provide
useful information to investors regarding our results and are
outlined as Alternative Performance Measures in Appendix 1. These
measures are not a substitute for IFRS measures. A list of
abbreviations is included at the end of this report 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 2023
Paul Sharratt Head of Investor Relations ir@santander.co.uk
Stewart Todd Head of Communications and Responsible Banking mediarelations@santander.co.uk
For more information: See Investor Update presentation www.santander.co.uk
Mike Regnier, Chief Executive Officer, commented:
"We have delivered a good set of results in spite of a
challenging macroeconomic environment. We have prioritised our
customers' needs, offering the right products and services as well
as support with their finances when they need it. We provided
competitive rates for savers, including a top-of-market easy access
savings account, and helped homeowners struggling with rising
rates, through the Government's Mortgage Charter.
This quarter we opened our new head office in Milton Keynes,
offering sustainable office spaces and exciting opportunities for
both staff and the wider community. We have continued our branch
network investment and modernisation programme, encouraging people
to visit and make the most of the facilities we provide. We also
opened two new Work Cafés, providing a modern environment to access
banking services, co-working space and free meeting rooms.
Our clear strategy and prudent approach to risk - alongside the
positive benefits of Banco Santander's new operating model - will
enable us to continue to support customers through the economic
challenges ahead."
9M-23 financial and business highlights
We continued to help and support our customers facing the
pressures of the current economic environment
-- Strong deposit proposition with top-of-market savings rate in September
and Edge Up current account paying interest and cashback.
-- Proactively contacted 2.2 million customers this year to offer support
with the increased cost of living.
-- Network investment with ongoing branch refurbishment and new Work
Cafés opened, providing banking and community services.
-- NPS ranked 5(th) for Retail and 1(st) for Business & Corporate.
Customer service is integral to our strategy and remains a key area
of focus(1) .
Good set of results with profit before tax of GBP1,731m (9M-22:
GBP1,489m)
-- Credit impairment charges down 20% to GBP204m. Cost of risk(2) of
13bps (9M-22: 9bps), close to expected through-the-cycle average.
-- Profit before tax up 16%, RoTE(2) of 15.0% (2022: 12.0%). Adjusted
profit(2) before tax up 13%, adjusted RoTE (2) of 15.5% (2022: 14.1%).
-- Banking NIM(2) up 19bps to 2.23% (9M-22: 2.04%) largely driven by
base rate increases and active management of our balance sheet.
-- CIR(2) of 47% (9M-22: 48%) as income increased, and transformation
programme savings partially offset inflationary pressures.
-- Transformation programme investment of GBP122m in 9M-23 (9M-22:
GBP156m). Adjusted CIR(2) of 44% (9M-22: 44%).
Customer loans and deposits reduced following market trends and
our disciplined pricing actions
-- With a slower housing market and higher mortgage rates, applications
fell in the first nine months of the year.
-- Our decision to optimise the balance sheet given higher funding
costs has contributed to a reduction of GBP10.1bn in mortgage lending.
-- Customer deposits reduced by GBP6.0bn in 9M-23; only down GBP0.2bn
in Q3-23 following good deposit acquisition in September.
-- As a result of active balance sheet management, our LDR reduced
to 111% (Dec-22: 113%).
Our strategy delivers strong liquidity, funding and capital with
prudent approach to risk
-- Strong LCR of 155% (2022: 163%) with liquidity pool of GBP51.1bn
(2022: GBP49.0bn).
-- Customer deposits mainly retail with low average balances, 86% of
these are covered by depositor guarantee scheme (FSCS).
-- 85% of lending is prime UK retail mortgages with an average LTV
of 51% (2022: 50%). Unsecured retail constitutes 2% of lending.
-- Corporate customers are diversified across operating sectors. Low
exposure to CRE and BTL lending.
-- Stage 3 ratio of 1.48% (2022: 1.24%), with a modest increase in
customers entering late arrears and a smaller mortgage book.
-- CET1 capital ratio of 16.0% (2022: 15.2%) and UK leverage ratio
of 5.3% (2022: 5.2%), well above regulatory requirements.
-- Repaid GBP6.0bn TFSME in 9M-23 as planned with GBP19.0bn outstanding.
Stable and diversified wholesale funding programmes.
Looking ahead
-- We expect high-for-longer interest rates to have a more pronounced
impact on households and businesses.
-- Banking NIM(2) is likely to peak in 2023 reflecting base rate increases
and disciplined pricing actions.
-- We expect transformation programme savings to continue to help offset
inflationary pressures on operating expenses.
1. See page 11 for more on NPS.
2. Non-IFRS measure. See Appendix 1 for details and a reconciliation
of APMs to the nearest IFRS measure.
Summarised consolidated income statement
9M-23 vs 9M-22 Adjusted(2)
---------------------------------------------------------------
9M-23 9M-22 Change 9M-23 9M-22 Change
GBPm GBPm % GBPm GBPm %
---------------------------------- -------- -------- ------- -------- -------- -------
Net interest income 3,561 3,293 8 3,561 3,293 8
Non-interest income(1) 424 415 2 421 422 -
Total operating income 3,985 3,708 7 3,982 3,715 7
Operating expenses before
credit impairment (charges)
/ write-backs, provisions
and charges (1,856) (1,770) 5 (1,764) (1,649) 7
Credit impairment (charges)
/ write-backs (204) (256) (20) (204) (256) (20)
Provisions for other liabilities
and charges (194) (193) 1 (161) (165) (2)
---------------------------------- -------- --------
Profit before tax 1,731 1,489 16 1,853 1,645 13
-------- --------
Tax on profit (462) (356) 30
Profit after tax 1,269 1,133 12
---------------------------------- -------- -------- -------
Banking NIM(2) 2.23% 2.04% 19bps
CIR(2) 47% 48% -1pp 44% 44% -
Profit before tax up 16%
-- Net interest income up 8% largely due to the impact of higher base
rates with disciplined deposit pricing, partially offset by a reduction
in lending margins. Banking NIM(2) benefited from the disciplined
pricing actions across both sides of the balance sheet, deposit
betas increased in the third quarter.
-- Non-interest income broadly flat. The GBP46m gain
from our sale of Euroclear shares was partially
offset by unrealised gains in 9M-22 which were not
repeated this year.
-- Operating expenses(3) up 5%, transformation programme
and ongoing efficiency savings partially offset
inflationary pressure on costs.
-- Credit impairment charges down 20%, reflecting better macroeconomic
scenarios from Sep-22.
-- Provisions for other liabilities and charges broadly flat .
-- Tax on profit increased by GBP106m as a result of both higher profits
and an increase in underlying tax rates overall for the period,
2022 was also impacted favourably by a legislative reduction in
the bank surcharge rate.
Adjusted profit before tax up 13%(2)
-- After transformation related adjustments, variances are explained
above or are not material.
Summarised balance sheet 30.09.23 31.12.22
GBPbn GBPbn
------------------------------ --------- ---------
Customer loans 208.8 219.7
Other assets 76.0 72.5
Total assets 284.8 292.2
------------------------------ --------- ---------
Customer deposits 190.5 196.5
Total wholesale funding 59.4 63.0
Other liabilities 19.7 18.0
------------------------------ --------- ---------
Total liabilities 269.6 277.5
Shareholders' equity 15.2 14.7
Total liabilities and equity 284.8 292.2
------------------------------ --------- ---------
1. Comprises 'Net fee and commission income' and 'Other operating income'.
2. Non-IFRS measure. See Appendix 1 for details of APMs, a reconciliation
to the nearest IFRS measure and a prior period adjustment for 9M-22.
3. Operating expenses before credit impairment (charges) / write-backs,
provisions and charges.
Customer deposits by segment 30.09.23 31.12.22
GBPbn GBPbn
Retail Banking 156.7 161.8
- Current accounts 66.7 76.6
- Savings accounts 73.7 67.0
- Business banking accounts 10.8 12.2
- Other retail products 5.5 6.0
Corporate & Commercial Banking 23.1 24.8
Corporate Centre 10.7 9.9
Total 190.5 196.5
Prudent approach to risk evident across product portfolios
-- Mortgages: average stock LTV of 51% (2022: 50%) and average new loan size of GBP227k (2022:
GBP237k). In 9M-23, c.GBP32bn of mortgages were refinanced and a further GBP50bn will reach
end of incentive period by the end of 2024.
-- UPL: Average customer balances GBP6k (2022: GBP6k).
-- Business Banking: includes GBP1.9bn (2022: GBP2.4bn) of BBLS with 100% Government guarantee.
-- Consumer Finance: 89% (2022: 84%) of lending is collateralised on the vehicle.
Arrears over 90 30 September 2023 31 December 2022
days past due
% %
------------------------------------ -------------------------------------- ------------------------------------
Mortgages 0.74 0.62
Credit cards 0.50 0.49
UPL 0.68 0.61
Overdrafts 2.54 2.24
Business Banking 3.11 3.47
Consumer Finance 0.40 0.44
------------------------------------ -------------------------------------- ------------------------------------
-- Early and late arrears remain at low levels across the portfolio.
However, we have seen a slight increase in mortgage, UPLs and overdrafts
arrears in recent quarters. Mortgage arrears of 0.74% remain below
pre-Covid-19 average of 1.31%(1) .
9M-23 ECL provision increased by GBP57m to GBP1,064m (Dec-22:
GBP1,007m)
-- Increases reflect updated economic assumptions and in CCB from higher
single name cases. In the third quarter we incorporated a softening
in the UK housing market in our scenarios.
-- Gross write-off utilisation of GBP149m (9M-22: GBP120m).
Credit performance resilient with small increase in Stage 3
ratio
Credit Performance 30 September 2023 31 December 2022
--------------------------------------- ------------------------------
Stage Stage Stage
Total Stage 1 Stage 2 Stage 3(2) Total 1 2 3(2)
Customer loans GBPbn % % % GBPbn % % %
------------------------ ------ -------- -------- ----------- ------ ------ ------ ------
Retail Banking 184.0 90.6 8.2 1.24 194.6 91.5 7.4 1.08
- Mortgages 177.0 91.0 7.9 1.15 187.1 91.8 7.3 0.99
- Credit Cards 2.6 83.7 14.7 2.82 2.5 85.7 12.9 2.53
- UPLs 2.0 83.9 14.9 1.21 2.0 87.3 11.7 1.07
- Overdrafts 0.4 29.7 63.7 7.67 0.5 33.5 61.0 5.93
- Business Banking 2.0 87.4 6.3 6.42 2.5 88.3 5.3 6.55
Consumer Finance 5.3 92.8 6.7 0.52 5.4 93.0 6.5 0.54
Corporate & Commercial
Banking 18.3 76.8 19.2 4.24 18.5 78.3 18.8 3.08
Corporate Centre 1.2 99.7 0.2 0.09 1.2 99.6 0.3 0.10
------------------------
Total 208.8 89.5 9.1 1.48 219.7 90.4 8.4 1.24
------------------------ ------ -------- -------- ----------- ------ ------ ------ ------
1. Average of 9 years to Dec-19.
2. Non-IFRS measure. See Appendix 1 for details and a reconciliation
of APMs to the nearest IFRS measure.
Updated economic scenarios
-- Our base case is broadly aligned to latest market consensus.
-- The stubborn inflation scenario is based on higher inflation, which
is persistently above the Bank of England target leading to further
base rate increases. These further add to the cost of living crisis
and falling consumer demand.
-- The other downside scenarios capture a range of risks, including
continuing weaker investment reflecting the unstable environment;
a larger negative impact from the EU trade deal increasing costs
and a continuing and significant mismatch between job vacancies
and skills, as well as a smaller labour force.
-- The upside scenario incorporates a quicker economic recovery with
some lag in house price declines compared to the base case.
-- Scenario weightings were unchanged between Q3-23 and Q2-23.
Economic scenarios Upside Base Downside Stubborn Downside Weighted
30-Sep-23 case 1 Inflation 2
% % % % %
----------------------------- ------- ------ --------- ----------- ---------
GDP
(calendar
year annual
growth rate) 2023 0.4 0.3 0.2 0.0 -0.5 0.2
2024 1.0 0.4 -0.4 -2.0 -3.6 -0.5
2025 2.3 1.3 0.4 -0.3 -0.3 0.8
2026 2.4 1.5 0.4 0.4 0.8 1.2
2027 2.4 1.4 0.3 0.8 2.3 1.4
Peak to
trough(1) 0.0 -0.2 -0.7 -2.8 -5.2 -1.2
Base rate
(At 31
December) 2023 5.25 5.25 5.75 6.00 5.25 5.45
2024 4.50 4.75 5.25 6.00 4.00 4.95
2025 3.50 3.75 4.00 4.50 2.75 3.80
2026 2.50 3.25 3.25 3.25 2.50 3.10
2027 2.50 3.00 3.00 3.00 2.50 2.90
5 yr Peak 5.25 5.25 6.00 7.00 5.25 5.68
---------
HPI
(Q4 annual
growth rate) 2023 -2.6 -7.0 -3.9 -5.4 -6.7 -5.9
---------------
2024 -5.2 -2.0 -8.0 -11.2 -14.1 -6.0
2025 -0.8 2.0 -2.4 -4.4 -6.4 -0.8
2026 2.0 3.0 2.0 2.0 2.0 2.5
2027 3.0 3.0 3.0 3.0 3.0 3.0
Peak to
trough(2) -12.3 -11.1 -17.5 -23.2 -28.2 -16.0
---------------------------- ------- ------ --------- ----------- --------- ---------
Unemployment
(At 31
December) 2023 4.4 4.3 4.5 4.5 5.2 4.4
---------------
2024 4.4 4.5 5.0 5.7 8.5 5.2
2025 3.6 4.4 5.0 5.8 7.9 5.0
2026 3.4 4.3 5.4 6.1 7.3 5.0
2027 3.1 4.3 5.6 6.1 6.6 4.9
5yr Peak 4.6 4.5 5.8 6.1 8.5 5.4
---------------------------- ------- ------ --------- ----------- --------- ---------
Weighting Sep-23: 10% 50% 10% 20% 10% 100%
ECL 30-Sep-23 Upside Base Downside Stubborn Downside Weighted
case 1 Inflation 2
(100% weight to GBPm GBPm GBPm GBPm GBPm GBPm
each scenario)
------------------------ ------- ------ --------- ----------- ---------
Retail Banking 486 498 566 673 871 573
Consumer Finance 70 71 71 74 74 72
Corporate & Commercial
Banking 387 396 428 456 499 419
Corporate Centre - - - - - -
------------------------ ------- ------ --------- ----------- --------- ---------
Total 943 965 1,065 1,203 1,444 1,064
------------------------ ------- ------ --------- ----------- --------- ---------
1. Peak is taken from GDP level at Q2-23.
2. Peak is taken from HPI level at Q3-22.
Treasury
Highly liquid balance sheet
-- Strong LCR of 155%, (Dec-22: 163%), with GBP18.1bn surplus LCR eligible
liquid assets to minimum requirement.
-- LCR eligible liquidity pool of GBP51.1bn (Dec-22: GBP49.0bn), includes
GBP40.1bn cash and central bank reserves (Dec-22: GBP44.5bn).
-- Term duration in the LCR eligible liquidity pool is hedged with
swaps to offset mark to market movements from interest rate changes.
Strong and diversified funding across well-established issuance
programmes
-- LDR reduced to 111% with lower customer lending and deposits after
pricing actions in Q4-22 to optimise the customer balance sheet
and mortgages down GBP10.1bn and deposits down GBP6.0bn.
-- In 9M-23 we issued c.GBP5.6bn Sterling equivalent medium term funding,
including c.GBP1.5bn of MREL issuance and c.GBP4.1bn of other secured
issuance from Santander UK plc. We also issued GBP1.1bn of Tier
2 securities which were bought by Banco Santander.
Capital ratios well above regulatory requirements
-- The CET1 capital ratio increased 80bps to 16.0%. This was largely
due to higher profit and a reduction in RWA exposure. We remain
strongly capitalised with significant headroom to minimum requirements
and MDA.
-- RWAs decreased with lower mortgage lending and active balance sheet
management.
-- UK leverage ratio remained broadly stable at 5.3% (2022: 5.2%).
UK leverage exposure remained stable at GBP249.2bn (2022: GBP248.6bn).
-- Total capital ratio increased to 22.2% (2022: 20.4%) as a result
of the increase in CET1 ratio and Tier 2 issuances.
Structural hedge evolution
-- Our structural hedge position decreased, with c.GBP99bn at Sep-23
(Dec-22: c.GBP108bn), and duration of c.2.6 years (Dec-22: c.2.5
years).
-- The balance on the structural hedge fell in 2023 reflecting lower
non-rate sensitive liabilities. The overall contribution has however
increased as maturities were replaced with higher yielding term
assets offsetting the lower balance. Going forward we expect the
overall contribution of the structural hedge to continue to increase.
Key metrics 30 September 31 December
2023 2022
GBPbn % GBPbn %
------------------------------------- ------ ------------ -------- -----------
LCR 51.1 155 49.0 163
CET1 capital 11.2 16.0 10.8 15.2
Total qualifying regulatory capital 15.5 22.2 14.5 20.4
UK leverage (T1 capital) 13.3 5.3 12.9 5.2
RWA 70.1 - 71.2 -
LDR - 111 - 113
Total wholesale funding and AT1 61.6 - 65.2 -
- term funding 53.6 - 57.8 -
- TFSME 19.0 - 25.0 -
- with a residual maturity of
less than one year 12.4 - 11.0 -
------------------------------------- ------ ------------ -------- -----------
Summarised changes to CET1 capital
ratio
Profit net of distributions +0.75pp
Pension -0.17pp
Expected loss less provisions -0.08pp
RWA and other +0.29pp
------------------------------------- ---------- ---------------- -----------------
CET1 capital ratio MDA trigger (headroom Minimum
3.8%) %
-------------------------------------------- ---------------------------
Pillar 1 4.5
Pillar 2A 3.2
Capital conservation buffer 2.5
Countercyclical capital
buffer 2.0
------------------------------ -----------------------------------------
Current MDA trigger 12.2
------------------------------ -----------------------------------------
Appendix 1 - Alternative Performance Measures
In addition to the financial information prepared under IFRS,
this Quarterly Management Statement contains non-IFRS financial
measures that constitute APMs, as defined in ESMA guidelines. The
financial measures contained in this report that qualify as APMs
have been calculated using the financial information of the
Santander UK group but are not defined or detailed in the
applicable financial information framework or under IFRS. We use
these APMs when planning, monitoring, and evaluating our
performance. We consider these APMs to be useful metrics for
management and investors to facilitate operating performance
comparisons from period to period. Whilst we believe that these
APMs are useful in evaluating our business, this information should
be considered as supplemental in nature and is not meant as a
substitute for IFRS measures.
a) Adjusted profit metrics
As shown in the table below, profit before tax is adjusted for
items management believe to be significant. We adjust for these to
facilitate operating performance comparisons from period to
period.
Ref. 9M-23 9M-22
GBPm GBPm
---------------------------------------------------------- -------- --------
Non-interest income
Reported (i) 424 415
Adjust for transformation related net loss
/ (gain) on sale of property (3) 7
Adjusted (ii) 421 422
-------------------------------------------------- ------- -------- --------
Operating expenses before credit impairment
(charges) / write-backs, provisions and charges
Reported (iii) (1,856) (1,770)
Adjust for transformation 92 121
Adjusted (iv) (1,764) (1,649)
-------------------------------------------------- ------- -------- --------
Provisions for other liabilities and charges
Reported (194) (193)
Adjust for transformation 33 28
Adjusted (161) (165)
----------------------------------------------------------- -------- --------
Profit before tax
Reported 1,731 1,489
Specific income, expenses and charges 122 156
Adjusted 1,853 1,645
----------------------------------------------------------- -------- --------
Prior period adjustment: In Q1-23 we removed the operating lease
depreciation adjustment to non-interest income and operating
expenses to align to Banco Santander's presentation. Prior periods
were restated, there was no impact on adjusted profit. In 9M-22
adjusted non-interest income and adjusted operating expenses
increased by GBP60m and the adjusted CIR increased by 1pp to
44%.
Net loss / (gain) on sale of property: previously named 'net
gain on sale of London head office and branch properties', now also
includes subsequent sale of property under our transformation
programme.
Transformation costs and charges: relate to a multi-year project
to deliver on our strategic priorities and enhance efficiency in
order for us to better serve our customers and meet our medium-term
targets.
Adjusted CIR
Calculated as adjusted total operating expenses before credit
impairment (charges) / write-backs, provisions and charges as a
percentage of the total of net interest income and adjusted
non-interest income. We consider this metric useful for management
and investors as an efficiency measure to capture the amount spent
to generate income, as we invest in our multi-year transformation
programme.
Ref. 9M-23 9M-22
(iii) divided by the sum of (i)
CIR + net interest income 47% 48%
Adjusted (iv) divided by the sum of (ii)
CIR + net interest income 44% 44%
b) Adjusted RoTE
Calculated as adjusted profit after tax attributable to equity
holders of the parent, divided by average shareholders' equity less
non-controlling interests, other equity instruments and average
goodwill and other intangible assets. We consider this adjusted
measure useful for management and investors as a measure of income
generation on shareholder investment, as we focus on improving
returns through our multi-year transformation programme.
9M-23 Adjust for As adjusted
transformation
GBPm GBPm GBPm
Profit after tax 1,269 88 1,357
Annualised profit after tax 1,697 1,814
Phasing adjustments (11) (70)
Profit / adjusted profit due
to equity holders of the parent
(A) 1,686 1,744
---------------------------------- ------------- ------------------- --------------
9M-23 Equity adjustments As adjusted
GBPm GBPm GBPm
---------------------------------- ------------- ------------------- --------------
Average shareholders' equity 14,980
Less average Additional Tier
1 (AT1) securities (2,196)
---------------------------------- ------------- ------------------- --------------
Average ordinary shareholders'
equity (B) 12,784
Average goodwill and intangible
assets (1,547)
---------------------------------- ------------- ------------------- --------------
Average tangible equity (C ) 11,237 9 11,246
---------------------------------- ------------- ------------------- --------------
Return on ordinary shareholders' 13.2% -
equity (A/B)
RoTE (A/C) 15.0% 15.5%
2022 Adjust for As adjusted
transformation
GBPm GBPm GBPm
Profit after tax 1,423 254 1,677
Less non-controlling interests
of annual profit (17) (17)
Profit / adjusted profit due
to equity holders of the parent
(A) 1,406 1,660
---------------------------------- -------- ------------------- ------------
2022 Equity adjustments As adjusted
GBPm GBPm GBPm
Average shareholders' equity 15,545
Less average Additional Tier
1 (AT1) securities (2,194)
Less average non-controlling
interests (118)
Average ordinary shareholders'
equity (B) 13,233
Average goodwill and intangible
assets (1,548)
---------------------------------- -------- ------------------- ------------
Average tangible equity (C) 11,685 63 11,748
---------------------------------- -------- ------------------- ------------
Return on ordinary shareholders' 10.6% -
equity (A/B)
RoTE (A/C) 12.0% 14.1%
Adjustment for transformation
Details of these items are outlined in section a) of Appendix 1,
with a total impact on profit before tax of GBP122m. The impact of
these items on the taxation charge was GBP34m and on profit after
tax was GBP88m. Tax is calculated at the standard rate of
corporation tax including the bank surcharge, except for items such
as conduct provisions which are not tax deductible.
Equity adjustments
These adjustments are made to reflect the impact of adjustments
to profit on average tangible equity.
c) Other non-IFRS measures and their calculations
-- Banking NIM : Annualised net interest income divided by average
customer loans for the period.
(9M-23 : GBP213,456m; 9M-22: GBP215,554m) .
-- 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-23 : GBP215,070m; 9M-22: GBP214,078m)
.
-- Cost-to-income ratio: 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.
-- RoTE: Profit after tax attributable to equity holders of the parent,
divided by average shareholders' equity less non-controlling interests,
other equity instruments and average goodwill and other intangible
assets.
-- Non-interest income: Net fee and commission income plus other operating
income.
-- Stage 3 ratio: The sum of Stage 3 drawn and Stage 3 undrawn assets
divided by the sum of total drawn assets and Stage 3 undrawn assets.
Appendix 2 - Additional information
30.09.23 31.12.22
Mortgage metrics
-------------------------------------------- ----------- -----------
Stock average LTV(1) 51% 50%
New business average LTV(1) 65% 69%
London lending new business average LTV(1) 64% 66%
BTL proportion of loan book 9% 9%
Fixed rate proportion of loan book 89% 89%
Variable rate proportion of loan book 8% 7%
SVR proportion of loan book 2% 3%
FoR proportion of loan book 1% 1%
Proportion of customers with a maturing
mortgage retained(2) 77% 81%
Average loan size (stock)(3) GBP187k GBP184k
Average loan size (new business) GBP227k GBP237k
-------------------------------------------- ----------- -----------
Customer loans by segment 30.09.23 31.12.22
GBPbn GBPbn
------------------------------------------------------ --------- ---------
Retail Banking 184.0 194.6
- Mortgages 177.0 187.1
- Other (Business Banking and unsecured lending) 7.0 7.5
Consumer Finance 5.3 5.4
Corporate & Commercial Banking 18.3 18.5
Corporate Centre 1.2 1.2
------------------------------------------------------ --------- ---------
Total 208.8 219.7
------------------------------------------------------ --------- ---------
Interest rate risk
NII sensitivity(4) 9M-23 2022
GBPm GBPm
+100bps 113 238
-100bps (122) (194)
-------------------- ------ ------
-- 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.
1. Balance weighted LTV.
2. Applied to mortgages four months post maturity and is calculated
as a 12-month average of retention rates to Jun-23 and Dec-22 respectively.
3. Average initial advance of existing stock.
4. Based on modelling assumptions of repricing behaviour.
List of abbreviations
APM Alternative Performance Measure
AT1 Additional Tier 1
BBLS Bounce Back Loan Scheme
Banco Santander Banco Santander S.A.
Banking NIM Banking Net Interest Margin
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
ESMA European Securities and Markets Authority
EU European Union
FoR Follow on Rate
FCA Financial Conduct Authority
FSCS Financial Services Compensation Scheme
GDP Gross Domestic Product
HPI House Price Index
IFRS International Financial Reporting Standards
LCR Liquidity Coverage Ratio
LDR Loan-to-Deposit Ratio
LTV Loan-To-Value
MDA Maximum Distributable Amount
MREL Minimum Requirement for own funds and
Eligible Liabilities
NPS Net Promoter Score
PRA Prudential Regulation Authority
RoTE Return on Tangible Equity
RWA Risk-Weighted Assets
Santander Santander UK Group Holdings plc
UK
SVR Standard Variable Rate
TFSME Term Funding Scheme with additional
incentives for SMEs
UK United Kingdom
UPL Unsecured personal loans
Retail NPS: Our customer experience research was subject to
independent third party review. We measured the main banking NPS of
17,095 consumers on a six month basis using a 11-point scale (%Top
2 - %Bottom 7). The reported data is based on the six months ending
30 September 2023, and the competitor set included in the ranking
analysis is Barclays, Halifax, HSBC, Lloyds Bank, Nationwide,
NatWest Group (Natwest & RBS) and TSB.
September 2023: NPS ranked 5(th) for Retail, we note a margin of
error which impacts those from 3(rd) to 5(th) and makes their rank
statistically equivalent.
December 2022: NPS ranked 6(th) for Retail, we note a margin of
error which impacts those from 4(th) to 6(th) and makes their rank
statistically
equivalent.
Business & Corporate NPS: Business and 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 8,522 interviews made in twelve months ended 18 September 2023
with businesses turning over from GBP0 - GBP500m 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.
September 2023: NPS ranked 1(st) for Business &
Corporate.
December 2022: NPS ranked 1(st) for Business &
Corporate.
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 2023, the bank had around 19,800
employees and serves around 14 million active customers, 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 retail and
commercial bank, founded in 1857 and headquartered in Spain and is
one of the largest banks in the world by market capitalization. Its
primary segments are Europe, North America, South America and
Digital Consumer Bank, backed by its secondary segments: Santander
Corporate & Investment Banking (Santander CIB), Wealth
Management & Insurance (WM&I) and PagoNxt. Its 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 over EUR120 billion in green financing between
2019 and 2025, as well as financially empowering more than 10
million people over the same period.
At 30 June 2023, Banco Santander had more than 1.2 trillion
euros in total funds, 164 million customers, of which 28 million
are loyal and 53 million are digital, 9,000 branches and over
212,000 employees.
Banco Santander has a standard 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, Santander UK plc 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
271 of the Santander UK Group Holdings plc 2022 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, Santander UK plc, 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.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
RNS may use your IP address to confirm compliance with the terms
and conditions, to analyse how you engage with the information
contained in this communication, and to share such analysis on an
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For further information about how RNS and the London Stock Exchange
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END
QRTMIBFTMTJTBMJ
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