Bank surge

Higher interest rates drive TSB to 29% profit uplift

TSB Edinburgh
TSB’s offices in George Street, Edinburgh

TSB followed yesterday’s cuts to some mortgage rates by reporting a sharp surge in statutory profit before tax helped by higher borrowing charges.

The bank reported a 29.3% rise in profit to £237.2 million last year from £183.5m in 2022.     

The main driver was higher income which rose by £50.5m (4.6%) to £1.158 billion primarily on the back of the higher interest rate environment, partially offset by lower mortgage margins in a highly competitive market. Net interest margin is 2.75%, up 18bps from the previous year (2022: 2.57%).    

However, inflationary pressures, including higher interest rates, also contributed to a rise in impairments by £13.4m (24.4%) to £68.3m (2022: £54.9m).

Chief executive Robin Bulloch said: “We are reporting another year of sustained profitability, demonstrating the impact of both our continued focus on customers, delivering products and services that genuinely meet their needs, and the work to make TSB a simpler, more efficient, and resilient bank.

“Throughout the cost-of-living challenges, our Money Confidence purpose has resonated strongly with our customers – and I’d like to thank everyone at TSB for their continued hard work to step up to support them.”                                 

Given the strong performance, TSB proposes a dividend of £120 million (2022: £50 million) to its parent Spanish company, Sabadell, in the first quarter of 2024, subject to shareholder and regulatory approval.

TSB’s cost-to-income ratio (statutory basis) is 73.6% (2022: 78.5%) as we continue to drive further efficiency and simplify our processes for customers and colleagues.

In a media conference call, the bank said the outlook was one of “continued resilience”. On mortgages it said it was seeing “improvements in the market place.”


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