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Customers continue to vote with their feet as TSB takes on the big banks

2nd February 2018


Today, 2 February 2018, TSB announces its financial results for the year to 31 December 2017. Four years since launch, TSB continues on its mission to bring more competition to UK banking. These results demonstrate that a bank focused on serving local communities really can thrive.

Highlights include:

  • TSB helped nearly 1,000 customers a week to buy their own home or get a better mortgage deal – making a record £7.0 billion of new mortgage advances to more than 47,000 homeowners during the year.
  • Customers continue to trust TSB with their money – with around 1,000 customers a day opening a TSB bank account, helping boost deposit balances to over £30 billion.
  • Customers continue to recommend TSB to friends and family with TSB’s Net Promoter Score (NPS)1 reaching +25 for 2017.
  • In November, TSB unveiled its new banking platform – with TSB set to become the first major bank in the UK to have designed and built a new state-of-the-art platform for the digital age.
  • Earlier this week TSB announced how it will be working with its parent Sabadell to provide an initial £30 million of investment to support Britain’s small businesses.
  • TSB Partners share in 2017’s success with a £30 million TSB Award – equivalent to more than six weeks’ pay or 12.5% of basic salary.

Further highlights include:

  • TSB advanced £7.0 billion in new mortgage loans in 2017, up 6.2% from £6.6 billion in 2016.
  • Franchise customer lending (excluding the Whistletree portfolio) grew to £28.7 billion in 2017, up 14.6% (£3.7 billion) from £25.1 billion at 31 December 2016.
  • 6.2%2 of all customers switching banks or opening a new account in 2017 chose TSB – beating our long-term target of 6% for the fourth year in a row.
  • Customer deposits grew to £30.5 billion, up 3.9% (£1.1 billion) from £29.4 billion at 31 December 2016.
  • Management profit before tax grew to £181.4 million, up by 2.1% (£3.7 million) from £177.7 million at 31 December 2016.
    - As expected, operating costs increased 16.7% year-on-year to £821.3 million, driven primarily by the £122.0 million increase in outsourcing fees paid to Lloyds Banking Group during 2017.
    - As reported at H1 2017, 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 accelerated the delivery of profit to TSB in 2017, generating £61.7 million management profit before tax in 2017 compared with £46.2 million in 2016 – an increase of £15.5 million.
    - Underlying management profit before tax, excluding the increase in outsourcing fees and the effect of the early return of the Mortgage Enhancement, grew £110.2 million (62.0%) year-on-year from £177.7 million.
  • Statutory profit before tax fell to £162.7 million, down 10.6% (£19.3 million) from £182.0 million primarily due to changes in management profit as outlined above, and the non-recurring gain from the sale of our interest in Visa Europe (£32.5 million) which was recognised in June 2016.
  • 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 20.0%.

Paul Pester, TSB Chief Executive Officer, commented: “When we launched TSB in 2013, we set out to bring more competition to UK banking and break the stranglehold of the big five banks. Once again in 2017 we saw a real vote of confidence in TSB, as the Bank continued to grow and our high-tech transformation really gathered pace.

“Last year, we saw around 1,000 customers a day bring their banking to TSB, and we were able to help nearly 1,000 customers a week to buy their own home or get a better mortgage deal. 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 £30 million in total.

“We’re now starting to put the pieces in place to really bring more competition to the small business banking market in 2018. There are 5.7 million hard-working small businesses in the UK that are the lifeblood of the UK economy. Creating more competition is the catalyst needed to unlock the real potential of these small businesses and help local communities thrive. At TSB we’ll be doing everything we can to lead the charge on this in 2018.

“We’ve already put our money where our mouth is – investing millions of pounds of our own money to build new services – and our parent, Sabadell, has announced up to £100 million of funding, with an initial tranche of £30 million, to invest in small businesses right across the UK. Alongside this, the £775 million put aside by RBS is a once in a generation opportunity to really break the shackles the big five banks have had on small business banking for so long: imagine the impact one of the largest grants could have in the hands of TSB – Britain’s challenger bank that has already shown its credentials in bringing more competition to the retail banking market in the UK.”

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.

Financial Results

Balance sheet and capital At 31 Dec 2017 At 31 Dec 2016 Change
Franchise customer lending – including Whistletree (£ million) 30,854.2 27,570.2 11.9%
Mortgage Enhancement customer lending (£ million) - 1,848.9 n/a
Total customer lending (£ million) 30,854.2 29,419.1 4.9%
Total customer deposits (£ million) 30,520.6 29,383.8 3.9%
Group loan to deposit ratio 101.1% 100.1% 1.0pp
Common Equity Tier 1 capital ratio 20.0% 18.4% 1.6pp
Financial performance At 31 Dec 2017 At 31 Dec 2016 Change
Franchise profit before tax – including Whistletree (£ million) 119.7 131.5 (9.0)%
Mortgage Enhancement profit before tax (£ million) 61.7 46.2 33.5%
Management profit before tax1 (£ million) 181.4 177.7 2.1%
Other one-off items2 (£ million) (28.8) (30.4) (5.3)%
Banking volatility3 (£ million) 10.1 2.2 359.1%
Gain on sale of share in Visa Europe (£ million) - 32.5 n/a
Statutory profit before tax (£ million) 162.7 182.0 (10.6)%
Group banking net interest margin4 3.02% 3.09% (7)bps
TSB asset quality ratio5 0.25% 0.31% (6)bps
Operating costs (management basis)1 (£ million) 821.3 703.8 16.7%

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 (see page 15).

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.

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 6.2% of all customers switching banks or opening a new account in the past 12 months choosing TSB.
  • On average, around 1,000 customers a day opened a new bank account with TSB during 2017.
  • Customer deposits grew to £30.5 billion – up 3.9% (£1.1 billion) year-on-year from £29.4 billion, 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 28,000 homeowners to get a better deal on their mortgage and around 19,000 people to buy their own home in 2017.
  • TSB extended £7.0 billion in new mortgage loans – up from the £6.6 billion total achieved in 2016, with the average mortgage loan-to-value remaining low at 44.2%.
  • Balance sheet growth remains strong, with total lending at £30.9 billion – up 4.9% (£1.4 billion) from £29.4 billion.
  • Franchise customer lending (excluding Whistletree) grew £3.7 billion, a 14.6% rise year-on-year from £25.1 billion – equivalent to a 11.9% rise year-on-year including Whistletree.

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 remaining strong at +25 points during 2017.
  • In September, TSB customers became the first in Europe to use iris scanning security with their mobile app, and in November were among the first in the world to use Apple’s new facial recognition technology – accessing their accounts simply by glancing at their phones.
  • In November, TSB unveiled its new state-of-the-art banking platform to journalists, analysts and TSB Partners. TSB Partners are already using the platform for bank account services, and mortgage brokers are using the platform to help customers access new TSB mortgages.


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. 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. While we continue to be confident in the strength of the UK economy, we are mindful of the challenges ahead. Interest rates are also predicted to remain at historically low levels, placing pressure on net interest margins for all banks.

Until the final phase of the roll-out 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 effect of this, together with the continued roll-off of the Whistletree portfolio and the early return of the Mortgage Enhancement portfolio will, we expect, lead to a reduction in our statutory profit before tax in 2018. However, excluding the effects of the increased outsourcing fees, we expect 2018 underlying management profit to continue to grow.

Looking forward, when the roll out of the new platform is complete, TSB’s costs will reduce considerably – as the increase we’ve seen in Lloyds Banking Group outsourcing costs is reversed. TSB’s new state-of-the-art banking platform will enable us to make banking even better for UK consumers and, importantly, small businesses and entrepreneurs. Customers are already starting to see the benefits of the new platform, and it will enable us to be more agile in responding to customers’ needs as they evolve. The platform will also unlock the capability for us to help more local businesses to thrive right across the UK – and bring much needed competition to the small business banking market.

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.


For further information please contact:


Charlotte Sjoberg, Head of Media Relations
T: 0207 003 9281 | M: 07901 104 067 |

Abigail Whittaker, Senior Media Relations Manager
T: 0207 003 9462 | M: 07795 300 734 |

Clinton Manning
T: 020 7395 0473 | M: 07711 972 662 |

Investors and analysts


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 identified as one of the top 10 big companies to work for in 2017.

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