Tear Sheet: Santander UK Group Holdings PLC

The stable outlook reflects our view that SanUK will maintain robust credit quality that will support earnings. It also reflects our expectation that the bank will maintain a good position in U.K. retail banking and a conservative risk profile. We assume Banco Santander will provide ongoing group support, despite our view of uncertain extraordinary group support in a severe stress scenario given its multiple-point-of-entry approach to resolution. This means that we believe the U.K. subgroup is more likely to support itself by a bail-in of its subordinated debt instruments for loss absorption and recapitalization than by relying on group support. We could lower the ratings over our two-year horizon if the uncertain U.K. economic environment compromises SanUK's performance significantly beyond

...Santander UK Group Holdings PLC (SanUK) delivered solid results in 2024. Pretax earnings were ú1.33 billion and return on tangible equity (RoTE) reached 8.8%. Earnings and RoTE were down compared to the previous year, largely driven by lower net interest income as margins tightened compared to a record 2023. Additionally, one-off charges amounting to ú295 million related to historical motor finance commission payments strained earnings (see Santander UK's Motor Finance Provision Indicates The Size Of U.K. Lenders' Potential Redress Payments, Nov. 20, 2024). The firm delivered a positive first-quarter 2025, with pretax earnings of ú358 million (first-quarter 2024: ú391 million), with a RoTE of 12.4%. We expect SanUK's performance to remain resilient in 2025. Its performance should reflect healthy earnings and solid funding and liquidity metrics, despite the uncertain economic environment and sluggish economic growth in the U.K. We expect continued revenue tailwinds from higher rates and...

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