TSB to pay dividend to parent after hitting targets
TSB intends to pay its Spanish parent Banco Sabadell a dividend for the first time despite suffering a £48.7m penalty for a disastrous IT meltdown.
The fine was imposed by the Financial Conduct Authority and Bank of England’s Prudential Regulation Authority over a bungled IT migration in 2018 that blocked millions of customers from their accounts for several weeks.
TSB lost €6 million (£5.3m) in the October to December quarter but achieved a record annual statutory profit before tax of £183.5m, up 16.5% on 2021, helped by cost-cutting.
It took a charge of £54.9m to guard against the prospect of bad loans in the tough economy but said it was “yet to see this translate to a marked increase in customers experiencing financial difficulties or missing payments”.
It will pay a dividend of £50m to Banco Sabadell, effectively offsetting the penalty.
Sabadell reported a 7.5% decline in fourth quarter net profits despite the boost for the sector as a whole from rising interest rates.
Robin Bulloch, TSB’s chief executive, said: “We have delivered a strong set of results for 2022
“This includes balance sheet growth, reduced underlying costs, and improved overall profitability. And, for the first time, TSB will pay a dividend to our parent company, Sabadell.”
In a media conference call he said the bank was seeing “no signs of significant distress” among customers who were coping with their financial position.
Nor was the bank seeing a lot of requests for support with mortgage payments.
He said Sabadell had no plans to sell TSB and has been “unequivocal” in stating that the bank will remain part of the group “indefinitely”.