26 April 2018

We’re putting things right

Today, 26 April 2018, TSB announces its financial results for the three months to 31 March 2018.

Latest service update:

  • Last weekend, TSB moved its five million customers and their 1.3 billion records to its new banking platform.
  • Over the past week, TSB customers have had problems in accessing their accounts via TSB’s website and mobile app.
  • TSB teams are working around the clock to fix these issues as soon as possible.
  • In addition, Sabadell and TSB have appointed IBM in a Systems Integration role, to help identify and resolve performance issues in the platform. In this role IBM will report to the TSB CEO.
  • No TSB customer will be left out of pocket as a result of these issues – to begin to put this right we will be waiving all overdraft fees and interest charges for all of our retail and small business customers for April.
  • As a way of saying thank you to our customers for sticking with us, we’ll be increasing the interest rate on our Classic Plus account to 5% AER.

Paul Pester, TSB Chief Executive Officer, says:  “As we moved over to our new banking platform last weekend, the landing was an incredibly bumpy one for our customers, and for that I am truly sorry. This is not the level of service that we pride ourselves on providing – nor is it what our customers have come to expect from TSB.

“Our teams continue to work around the clock to fix the problems that some of our customers are having in accessing their TSB accounts. I want to reassure our customers that the engine room of the bank is working as it should. This means that for the vast majority of our five million customers, everything is running smoothly. 

“The challenge we are facing at the moment is that while we know it’s working, one of the main ways that our customers see everything is working – through our internet banking and mobile app – isn’t functioning as well as it should be, and I can appreciate how frustrating this must be for our customers.  

“Of course, customers can rest assured that no one will be left out of pocket as a result of these problems. To begin to put things right, we will be waiving all overdraft fees and interest charges for all of our retail and small business customers for April.

"We have achieved a tremendous amount in the past four years in building TSB. We clearly have some issues we’re dealing with but we will come out the other side. The way we deal with every single one of our frustrated customers as quickly as possible will define TSB – both now and in 10, in 15 and in 20 years to come as we continue on our mission to bring more competition to UK banking.”

Financial results in the quarter were:

  • TSB advanced £1.2 billion of new mortgage loans in the first quarter of 2018, building on the £7.0 billion advanced in 2017.
  • Total customer lending at £30.8 billion is down 0.3% year-on-year due to the effect of the early return of the Mortgage Enhancement and the continued roll-off of the Whistletree portfolio. The mortgage portfolio loan-to-value remained low at 44.2%.
  • Franchise ustomer lending (excluding the Whistletree portfolio) grew to £28.8 billion, up 7.9% (£2.1 billion) year-on-year from £26.7 billion.
  • 6.6%1 of all customers switching banks or opening a new account in the past year chose TSB, on average, around 750 customers a day opened a new bank account with TSB during the quarter.
  • Customer deposits grew to £30.6 billion, up 3.0% (£0.9 billion) year-on-year from £29.7 billion.
  • Operating costs increased 2.3% year-on-year to £207.5 million primarily due to increased outsourcing fees paid to Lloyds Banking Group.
  • Management profit before tax grew to £29.5 million, up by 5.4% (£1.5 million) year-on-year from £28.0 million.
    - As previously reported, the Mortgage Enhancement portfolio – a £3.4 billion residential mortgage loan book created in February 2014 to enhance TSB’s profitability – was returned early, in June 2017. This portfolio earned £9.5 million profit before tax in the first quarter of 2017 which, consequently, was not generated in 2018.
    - Management profit before tax (Franchise including Whistletree), excluding the effect of the early return of the Mortgage Enhancement portfolio, grew £11.0 million year-on-year (59.5%) from £18.5 million to £29.5 million.
  • Statutory profit before tax fell to £19.3 million, down 39.3% (£12.5 million) from £31.8 million primarily due to temporary movements in normal hedging arrangements, in turn driven by market rate fluctuations, and which will unwind in the future2.
  • TSB's liquidity is robust while our capital position remains one of the strongest of the UK banks with a fully loaded common equity tier one ratio of 19.8%3.
1 Source: 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.  Calculated on a 12 month rolling basis.  Data presented on a two month lag.
2 Refer to banking volatility in Financial Results on page 2. 
3 Fully loaded CET ratio excluding any IFRS9 transitional adjustments.

Financial Results

Balance sheet and capital At 31 Mar 2018 At 31 Dec 2017 At 31 Mar 2017 Change vs. Dec 17 Change vs. Mar 17
Franchise customer lending – excluding Whistletree (£ million) 28,792.9 28,744.8 26,691.1 0.2% 7.9%
Franchise customer lending – including Whistletree (£ million)                              30,801.4 30,854.2 29,113.9 (0.2)% 5.8%
Mortgage Enhancement customer lending (£ million) - - 1,764.7 n/a n/a
Total customer lending (£ million) 30,801.4 30,854.2 30,878.6 (0.2)% (0.3)%
Total customer deposits (£ million) 30,584.7 30,520.6 29,692.2 0.2% 3.0%
Group loan to deposit ratio 100.7% 101.1% 104.0% (0.4)pp (3.3)pp
Common Equity Tier 1 capital ratio (fully loaded) 19.8% 20.0% 18.1% (0.2)pp 1.7pp
Financial performance Q1 2018 Q4 2017 Q1 2017 Change vs. Q4 17 Change vs. Q1 17
Franchise profit before tax – including Whistletree (£ million) 29.5 34.1 18.5 (13.5)% 59.5%
Mortgage Enhancement profit before tax (£ million) - - 9.5 n/a n/a
Management profit before tax1(£ million) 29.5 34.1 28.0 (13.5)% 5.4%
Other one-off items2 (£ million) (3.5) (2.9) (3.4) 20.7% 2.9%
Banking volatility3 (£ million) (6.7) (2.7) 7.2 148.1% (193.1)%
Statutory profit before tax (£ million) 19.3 28.5 31.8 (32.3)% (39.3)%
Group banking net interest margin4 3.00% 3.03% 3.05% (3)bps (5)bps
TSB asset quality ratio5 0.27% 0.27% 0.28% 0bps (1)bps
Operating costs (management basis)1 (£ million) 207.5 208.9 202.8 (0.7)% 2.3%
1 Management 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.
2 Other one off items reflect costs associated with restructuring the branch network and certain migration costs. 
3 Banking volatility reflects gains and losses on derivatives not in hedge accounting relationships, hedge accounting ineffectiveness, and volatility associated with share schemes.
4 Management basis net interest income divided by average loans and advances to customers, gross of impairment allowance.
5 Impairment charge on loans and advances to customers divided by average loans and advances to customers, gross of impairment allowance

Media Contacts

For further information please contact:


Charlotte Sjoberg, Head of Media Relations
T: 0207 003 9281 | M: 07901 104 067 | charlotte.sjoberg@tsb.co.uk

Abigail Whittaker, Senior Media Relations Manager
T: 0207 003 9462 | M: 07795 300 734 | abigail.whittaker@tsb.co.uk

Supreet Thomas, Senior Media Relations Manager
M: 07519 502123 | supreet.thomas@tsb.co.uk

Clinton Manning
T: 020 7395 0473 | M: 07711 972 662 | cmanning@maitland.co.uk

Investors and analysts


Notes to editors

More information on TSB’s IT migration 

TSB was launched to bring more competition to UK banking and ultimately to make banking better for all UK consumers.

Over the weekend TSB carried out the biggest bank IT migration ever undertaken in Europe. 

Whilst everything is running smoothly for the vast majority of its five million customers, TSB has not provided the level of service to all of its customers that it prides itself in providing, and it’s not what TSB customers have come to expect.

For instance, TSB is aware that some customers have had problems in accessing the website and mobile app. Throughout this TSB customers have, of course, been able to use their payment cards, withdraw money from ATMs, make payments, etc. 

Whilst the app and website are now live again, TSB has chosen to bring these services back online gradually. Therefore, while some customers will get access straight away, others may have to wait a short while.

No customer will be out of pocket as a consequence of these problems.

Customers’ data is safe.

For 20 minutes on Sunday evening a maximum of 402 customers could see some data that TSB would normally not show them.  Each of these instances were “connected accounts” where third party access had been granted, typically to family members.  No personal customer information was shared. TSB has also tracked every payment made by these customers’ accounts and is speaking to every customer to confirm each payment’s validity.  TSB’s CEO has written to each customer apologising and TSB has informed the Information Commissioner’s Office.

TSB had no choice but to move to a new platform.

TSB was established as a consequence of the State Aid that Lloyds Banking Group received during the financial crisis. Rather than being established with its own IT platform, TSB had to settle with renting a competitor’s. This meant that when TSB wanted to launch a new product or service it had to apply for the right to do so to one of its competitors. This limitation to TSB’s competitive position was recognised in the Office of Fair Trading’s report on TSB/Verde to the Chancellor in September 2013.  

TSB’s new platform will help TSB bring more competition to UK banking.

TSB is the first major bank in the UK operating on a banking platform designed and built for the digital age. In the long-run this will deliver huge benefits to consumers, bringing much needed competition to UK banking, including enabling TSB to launch services to small businesses across the UK.