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TSB seals third year of extraordinary growth

26th January 2017


Today, 26 January 2017, TSB announces its financial results for the year to 31 December 2016, revealing management profit climbed 68.1% to £177.7million and that the bank now serves over five million customers.


Highlights include:

  • Every three minutes TSB helped a customer buy their own home, making a record £6.6bn of new mortgage advances through 2016
  • TSB has increased lending1twice as quickly as expected at the time of its IPO in June 2014: 46% growth in customer lending achieved three years ahead of schedule
  • Customers continued to trust TSB with their money – with deposit balances growing £3.5bn (or 13.6%) to £29.4bn and 6.4%2of all customers opening a bank account or switching banks in the year choosing TSB
  • During the year, TSB was rated Britain’s most recommended high street bank3and TSB’s Net Promoter Score (NPS)4reached +23 for 2016, from +16 in 2015 and was -24 at the point when the bank launched in 2013
  • TSB Partners share in this success with £28 million TSB Award – equivalent to 12.5% of basic salary or more than six weeks’ pay

Further key aspects of TSB’s 2016 full-year results include:

  • TSB advanced £6.6 billion in new mortgage loans in 2016, up 36.5% from £4.8 billion in 2015
  • Total customer lending rose to £29.4 billion in 2016, up 11.4% from £26.4 billion at 31 December 2015
  • 6.4% of all customers opening a new bank account or switching banks in 2016 chose TSB – exceeding our target of 6% for the third year running
  • Customer deposits grew to £29.4 billion, up 13.6% from £25.9 billion at 31 December 2015
  • Operating costs fell 0.8% to £734.7 million
  • Management profit before tax grew 68.1% to £177.7 million in 2016 from £105.7 million in 2015. Statutory profit before tax rose to £182.0 million in 2016, an increase of 169.2% compared to £67.6 million in 2015
  • 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 18.4%.

Paul Pester, TSB Chief Executive Officer, commented:“When we launched TSB back in 2013, we set out to do our bit to break the stranglehold of the big five banks and bring a different sort of banking to the UK. Three years on, we’ve shown that a bank focused on serving local communities can really thrive.

“We now have over five million customers and we’ve been really pleased by the scale and speed at which customers have voted with their feet to join us, given that moving banks remains so difficult for customers. We’ve grown at twice the pace we aspired to back in 2014. More people chose TSB than ever before in 2016 and we are now Britain’s most recommended high street bank. I’m delighted that our Partners will share in this success with the TSB Award paying out 12.5% of basic salary – equivalent to more than six weeks’ pay – and over £28 million in total.

“Last year also saw us all-but complete the build of our brand new, state-of-the-art, banking platform which we look forward to unveiling to customers towards the end of this year. This will help us offer more new and exciting products and services to our customers in the future, and accelerate our efforts to bring more competition to UK banking.

“I’m proud that since our re-launch back onto high streets across Britain we’ve been able to do our bit to make banking better for UK consumers, however, we can’t do this alone. We will continue to work closely with the Government, policymakers and regulators in an attempt to bring the full force of competition to bear on the UK banking market. Only then will the culture of UK banks finally shift to putting the interests of customers first.”

1Excluding Mortgage Enhancement
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.
3Source: Independent benchmark study (covering all major banks) conducted by BDRC Continental; sample 15,000 UK consumers, March 2016.
4NPS 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 as a 12 month rolling average, with the exception of the 2013 NPS, which is a spot score at October 2013.

Financial Results

Balance sheet and capital At 31 Dec 2016 At 31 Dec 2015 Change
TSB franchise customer lending (£ million) 25,090.3 21,119.4 18.8%
Mortgage Enhancement 1848.9 2,272.3 (18.6)%
Whistletree Loans 2,479.9 3,006.4 (17.5)%
Total customer lending (£ million) 29,419.1 26,398.1 11.4%
Total customer deposits (£ million) 29,383.8 25,874.2 13.6%
Group loan to deposit ratio 100.1% 102.0% (1.9)%
Common Equity Tier 1 capital ratio 18.4% 17.8% 0.6%
Financial performance At 31 Dec 2016 At 31 Dec 2015 Change
Franchise profit before tax (£ million) 64.6 40.3 60.3%
Mortgage Enhancement profit before tax (£ million) 46.2 63.2 (26.9)%
Whistletree Loans (£ million) 66.9 2.2 -
Management profit before tax1(£ million) 177.7 105.7 68.1%
Statutory profit before tax (£ million) 182.0 67.6 169.2%
Group banking net interest margin2 3.09% 3.51% (42)bps
TSB asset quality ratio3 0.31% 0.37% (6)bps
Operating costs (statutory basis) (£ million) (734.7) (740.8) (0.8)%

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 exceed its 6% share of flow target with 6.4% of all customers switching banks or opening a new account choosing TSB during 2016.
  • Customer deposits grew to £29.4 billion (a 13.6% increase on December 2015) reflecting customers’ continued trust in TSB.
  • In the last three years, deposit balances have increased £6.3bn, up 27.2% from £23.1bn in December 2013.

2. Help more people borrow well

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

  • Balance sheet growth remains strong, with total lending growing to £29.4 billion – up from £26.4bn (11.4%) since December 2015.
  • TSB continues to grow its mortgage offering with lending in the period driven by the success of TSB’s mortgage broker service.
  • TSB advanced £6.6 billion in new mortgage loans in 2016, up 36.5% from £4.8 billion in 2015.
  • Over the last three years, TSB has advanced £12.9bn in new mortgage loans to customers meaning customer lending (excluding the mortgage enhancement) has grown by 46.3% (£8.7bn) since December 2014.
  • Helping customers to borrow well means that our average mortgage loan-to-value remains low at 42%.

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 more willing to recommend TSB to friends and family than any other high street bank as the Bank’s Net Promoter Score reached +23 points at the end of the year.
  • In the last three years, TSB’s NPS has increased from -24 points at the point when the bank launched to +23 points for 2016.
  • TSB climbed 84 places in KPMG Nunwood’s 2016 UK Customer Experience Excellence ranking – becoming the highest ranked high street bank 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 and as the form and impact of this takes time to become clear. Interest rates are also predicted to remain at historic low levels, placing pressure on net interest margins for all banks.

Whilst we expect to continue to grow TSB in a responsible and sustainable way during 2017, the prevailing low interest rates, the contractual increase of more than £100 million in outsourcing fees we pay to Lloyds Banking Group, and the continued roll-off of the Mortgage Enhancement portfolio will, we expect, lead to 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 (LBG) to a new, state-of-the-art platform designed and built with our shareholder Sabadell. The new platform should reduce TSB’s costs considerably, with an expectation that the increase in LBG outsourcing costs referred to above will be 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 requirements. We expect to unveil the new platform fully to our customers towards the end of 2017 but they will begin to experience it through the launch of our new mobile banking app in Q1 2017.

In the meantime, we are continuing to invest in both our digital offering and branch network, to make sure customers experience excellent levels of service however they choose to bank with us. We were delighted to launch the first of our new, purpose-built, flagship branches in Birmingham and Aberdeen at the end of 2016.

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.


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Notes to editors


TSB was built to bring more competition to British banking - to be a real challenger to the big banks and to deliver the kind of banking the people of Britain want. 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, innovative mobile and digital banking, nationwide network of branches and 8,200 Partners mean we are big enough to make a difference, but small enough to be an agile challenger to the entire market.

For further information about TSB Bank plc, please visit our website