TSB swings into £107m loss after IT chaos

TSB swings into £107m loss after IT chaos

TSB fell into the red on the back of its failed IT upgrade which left almost two million customers unable to access their bank accounts in April.

The bank's results out this morning (27 July) showed that in the first six months of 2018 it made a loss of £107.4m, compared with a profit of £108.3m in the same period last year.

On top of this, TSB has put aside £176m to handle the costs of the fiasco, which will cover customer compensation, additional resources and foregone income as a result of waived overdraft fees and interest charges.

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TSB's problems began in April, when it began moving its customer data from a system controlled by its former owner, Lloyds Banking Group, to a new system built by its new owner, the Spanish banking group Banco Sabadell.

The new system proved unable to cope with the number of people attempting to use it and some TSB customers faced weeks of disruption.

The issue prompted the Financial Conduct Authority to launch an investigation into TSB.

This morning Paul Pester, TSB's chief executive, said: "We’re making progress in resolving the service problems customers experienced following our IT migration, and we will continue to work tirelessly until we have put things right.

"I know how frustrated many customers have been by what’s happened. It was not acceptable, and was not the level of service that we pride ourselves on – nor was it what our customers have come to expect from TSB.

"Our priority in the second half of the year continues to be putting things right for our customers. Looking further ahead we are determined to get back to bringing more competition to UK banking and ultimately making banking better for consumers and small businesses."

Of the £176m which TSB has set aside, £115.8m has been earmarked for customer redress while £30.7m will go on additional resources and £29.9m will cover waived fees and charges.

TSB revealed about 26,000 customers switched their bank accounts away from the bank, but more than 20,000 customers opened a new bank account or switched their account to TSB in the second quarter of the year.

Total customer deposits decreased by £900m to £29.6bn in the first six months of the year but total lending increased by £800m to £31bn.

TSB advanced £2.6bn of new mortgage loans in the first half of 2018.