Growing pressure

TSB back in profit but warns of squeeze on mortgages

TSB is moving away from branch banking

TSB swung back into profit last year following a focus on cutting costs and increased lending but said growing pressure on household incomes may impact on the appetite for mortgages.

Statutory profit before tax for the year to the end of December came in at £157.5 million against a loss of £204.6m last time.

Total income increased £85.3m (+9.5%) to £980m on the back of record mortgage lending, though the bank accepted that household and business finances will suffer from rising inflation and interest rates, which could impact mortgage demand.

Operating expenses fell by £30.4m (-3.7%) to £797.3m, reflecting lower resource and property costs and a more normalised level of investment spend.

The net impact of one-off items represented a cost of £25.1m in 2021 (2020: £107.7 million). This primarily reflects lower restructuring and branch transformation costs, a significantly lower remediation charge relating to the treatment of some customers in arrears, and lower migration related income.

TSB said the balance sheet remains resilient, with a common equity tier 1 ratio of 15.8% and Liquidity Coverage ratio of 194%.

The results follow the closure of 70 bank branches across the UK, will reduce its network to 220 by the end of June 2022.

Robin Bulloch, TSB’s interim chief executive, said: “This is a great set of results. With a focus on delivering our Money Confidence purpose, we have seen outstanding income growth in 2021, made improvements in the products and services we offer customers, and become a more efficient and resilient bank.”

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