26 April 2017

TSB hits the ground running in 2017

Today, 27 April 2017, TSB announces its financial results for the three months to 31 March 2017. Building on the momentum of 2016, TSB continues on its mission to bring more competition to UK banking. These results continue to demonstrate that a bank focused on serving local communities can really thrive.

Highlights include:

  • TSB helped more customers than ever before buy their own home, providing £2.2 billion of new mortgage advances for more than 14,000 homebuyers in the quarter.
  • Customers continued to trust TSB with their money - with over 6,000 customers a week opening a TSB bank account, helping boost deposit balances to £29.7 billion.
  • TSB's Net Promoter Score (NPS)1 climbed to +24 this quarter, up from +21 this time last year.
  • TSB is recognised as one of the top 10 Best Big Companies to work for in the UK.

Further highlights of TSB's Q1 results include:

  • TSB advanced £2.2 billion in new mortgage loans, building on the £6.6 billion total for 2016.
  • Total customer lending rose to £30.9 billion, up 12.6% year-on-year from £27.4 billion.
  • Franchise customer lending grew to £26.7 billion, up 19.1% year-on-year from £22.4 billion.
  • 6%2 of all customers switching banks or opening a new account in the past 12 months chose TSB – in line with our long-term target.
  • Customer deposits grew to £29.7 billion, up 11.0% year-on-year from £26.7 billion.
  • Operating costs increased 23.7% year-on-year to £202.8 million, driven primarily by the £30.2m contractual increase in outsourcing fees paid to Lloyds Banking Group.
  • As expected, due to this increase, management profit before tax fell to £28.0 million, down 53.3% year-on-year from £59.9 million.  Statutory profit before tax fell to £31.8 million, down 39.5% year-on-year from £52.6 million.
  • TSB’s liquidity is robust while our capital position remains one of the strongest of the UK banks with a common equity tier one ratio of 18.1%.

Paul Pester, TSB Chief Executive Officer, commented:“TSB hit the ground running in 2017 as we continued on our mission to make banking better for all UK consumers.

“We saw over 6,000 customers a week bring their banking to TSB in the quarter, with total deposit balances growing to nearly £30 billion.  We’ve also helped more customers than ever before to borrow well with TSB, lending £2.2 billion to more than 14,000 homebuyers.

“However, there’s still plenty to do as we strive to bring more competition to UK banking.  Breaking the stranglehold of the big five banks remains top of our agenda.  Only last week, we lifted the lid on the broken loans market exposing the tactics employed by providers – which are costing consumers as much as £400 million a year.  We’re challenging the industry to change and we’ll continue to work closely with policymakers and regulators to ensure competition plays its part in creating a loans market that works better for consumers

“Looking forward, preparations are well underway as we get ready to unveil our new, state-of-the-art banking platform towards the end of the year.  This will help us offer customers new and exciting products and services in the future, and accelerate our efforts to bring more competition to UK banking.  Earlier this week, we completed the roll-out of our new mobile banking app – which is just the start of the transformation to come at TSB.”

1NPS is based on the question “On a scale of 0-10, where 0 is not at all likely and 10 is extremely likely, how likely is it that you would recommend TSB to a friend or colleague?” NPS is the percentage of TSB customers who score 9-10 after subtracting the percentage who score 0-6. Calculated on a year-to-date basis.
2Source: CACI Current and Savings Account Market Database (CSDB) which includes current, packaged, youth, student and basic bank accounts, and new account openings excluding account upgrades. Data presented on a two month lag.


Balance sheet and capital  

At 31 Mar


At 31 Dec


At 31 Mar



Vs. Dec 16


Vs. Mar 16

Franchise and Whistletree customer lending (£ million)   29,113.9 27,570.2 25,277.0 5.6% 15.2%
Mortgage Enhancement customer lending (£ million)   1,764.7 1,848.9 2,157.5 (4.6)% (18.2)%
Total customer lending (£ million)   30,878.6 29,419.1 27,434.5 5.0% 12.6%
Total customer deposits (£ million)   29,692.2 29,383.8 26,746.0 1.0% 11.0%
Group loan to deposit ratio   104.0% 100.1% 102.6% 3.9pp 1.4pp
Common Equity Tier 1 capital ratio   18.1% 18.4% 17.7% (0.3)pp 0.4pp
  Financial performance            
Franchise and Whistletree profit before tax (£ million)   18.5 18.3 47.3 1.1% (60.9)%
Mortgage Enhancement profit before tax (£ million)   9.5 10.1 12.6 (5.9)% (24.6)%
Management profit before tax1 (£ million)   28.0 28.4 59.9 (1.4)% (53.3)%
Statutory profit before tax (£ million)   31.8 20.4 52.6 55.9% (39.5)%
Group banking net interest margin2   3.05% 2.94% 3.26% 11bps (21)bps
TSB asset quality ratio3   0.28% 0.35% 0.28% 7bps 0bps
Operating costs (statutory basis) (£ million)   202.8 185.8 164.0 9.1% 23.7%

1Management basis is the basis of reporting used by the Board to assess performance without the distortion of one-off and volatile items which are included on a statutory basis.
2Management basis net interest income divided by average loans and advances to customers, gross of impairment allowance.
3Impairment charge on loans and advances to customers divided by average loans and advances to customers, gross of impairment allowance.


Strategic Update

TSB's three strategic pillars have remained the same since relaunching onto high streets across Britain in September 2013: to provide great banking to more people, to help more people to borrow well, and to provide the kind of banking people tell us they want and we believe they deserve.

1. Provide great banking to more people

Grow market share of bank accounts by consistently taking a greater than 6% share of gross flow over a five-year period.

  • TSB continues to deliver on its share of flow target with 6% of all customers switching banks or opening a new account in the past 12 months choosing TSB.
  • On average, over 6,000 customers a week opened a bank account with TSB during the quarter.
  • Customer deposits grew to £29.7 billion, an 11.0% increase on Q1 2016, reflecting customers' continued trust in TSB.

2. Help more people borrow well

Grow TSB franchise customer lending by 40% to 50% over a five-year period from IPO.

  • TSB helped over 14,000 homebuyers to borrow well in the quarter, extending £2.2 billion in new mortgage loans - buldingon the £6.6 billion total in 2016, with our average mortgage loan-to-value remaining low at 43%.
  • Balance sheet growth remains strong, with total lending growing to £30.9 billion - up 12.6% on £27.4 billion at 31 March 2016.
  • Franchise customer lending grew to £26.7 billion - up 19.1% on £22.4 billion at 31 March 2016.

3. Provide the kind of banking experience people want and deserve

Deploy TSB's strong digital capability. Build greater consideration of the TSB brand. Deliver a differentiated customer experience through our Partners.

  • Customers are willing to recommend TSB to friends and family with the Bank's Net Promoter Score reaching +24 points for the first quarter of 2017 up from +21 at this time last year.
  • TSB has been shortlisted by Which? as Banking Brand of the Year for 2017 with the results to be announced in May.
  • TSB was also named in the top 10 of Britain's Best Big Companies to work for by the Sunday Times, making TSB the best bank to work for in the UK.


TSB remains one of the most strongly capitalised banks in the UK and, with a healthy liquidity reserve, is well positioned to weather economic uncertainty or shocks.  While we continue to be confident in the strength of the UK economy, we are mindful of the challenges ahead.  Most commentators predict that economic and market conditions are likely to remain uncertain for a range of reasons, including the UK’s exit from the EU.  Despite emerging inflationary pressure, interest rates are also predicted to remain at historically low levels, placing pressure on the net interest margins of all banks. 

We expect to continue to grow TSB in a responsible and sustainable way throughout 2017.  As we’ve seen in this quarter however, the contractual increase of more than £100 million in outsourcing fees we pay to Lloyds Banking Group this year, and the continued roll-off of the Mortgage Enhancement portfolio will continue to drive a significant reduction in our profit before tax in 2017.  

Looking forward, TSB’s ability to make banking better for all UK consumers will be accelerated as we continue to invest in migrating our banking platform from the one provided by Lloyds Banking Group to a new, state-of-the-art platform designed and built with Sabadell.  The new platform will reduce TSB’s costs considerably, with the increase in LBG outsourcing costs seen this year reversed in future years.  The new platform will also provide opportunities for TSB to become more innovative and agile in responding to our customers’ evolving banking needs.  We expect to unveil the new platform fully towards the end of 2017, but customers are already beginning to experience it through our brand new mobile banking app which was fully rolled out this week.  This is just the start of the significant transformation to come at TSB.

As we prepare for migration, it’s important to us that we continue to deliver excellent service to our customers.  In order to do this we intend to grow our mortgage lending less quickly over the coming months.  However, we expect to reverse this slowdown as we reach the end of 2017 and move into 2018.  

We remain confident that we have the strategy in place to remain an attractive long-term home for customers – and one that is distinct from other banks on the high street.

Notes to editors

TSB was built to bring more competition to UK banking and ultimately make banking better for all UK consumers. TSB only serves local customers and local businesses, to help fuel local economies, because communities thriving across Britain is a good thing for all of us.

We have a simple, straightforward and transparent banking model and make clear on our website how we operate and make money.  We offer the products and services people tell us they want, with none of the funny stuff people normally associate with traditional banks.

Our five million customers appear to notice: TSB is Britain’s most recommended high street bank and was recently identified as one of the top 10 big companies to work for.

For further information about TSB Bank plc, please visit our website www.tsb.co.uk.