TSB profits hit by IT payment

TSB profits hit by IT payment

TSB Bank saw its profits dented by the roll out of a new IT system, with profits before tax falling by more than 10 per cent to £162m.

TSB, which was spun out of Lloyds Banking Group in 2013 and bought by Spain’s Sabadell two years later, still relies on Lloyds’ technology, for which it pays an increasing fee to its former parent.

The bank warned this would continue to drag on profits for 2018.

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"Until the final phase of the rollout of our new banking platform to customers is completed the contractual increase in outsourcing fees paid to Lloyds Banking Group will continue into 2018," the bank said.

It added that its underlying profit would continue to grow.

TSB advanced £7bn in new mortgage loans in 2017, up 6.2 per cent from £6.6bn in 2016.

Its lending has grown by more than 50 per cent since launch, and is now more than £30bn. In 2017 customer lending grew by 4.9 per cent to over £30bn; this has now grown by more than 50 per cent since launch.

The group’s intermediary channel, Franchise, has seen its  portfolio balances increasing by £3.3 billion.

TSB also announced that Richard Meddings, the former finance director of Standard Chartered, would become its new chairman with immediate effect. 

It also exceeded its target of attracting more than 6 per cent of all new and switching bank accounts in the UK for the fourth year in a row and delivered a profit of £162m before tax.