01 February 2021

TSB Bank plc announces 2020 full-year results

Financial Results for the full year 2020:

  • Total customer lending at £33.3 billion increased by £2.2 billion (+7.2%) driven by growth in core mortgages and business lending through the Bounce Back Loan Scheme. 
  • Customer deposits at £34.4 billion increased by £4.2 billion (+13.9%) due to reduced customer spending and growth in business deposits as businesses maintained high levels of liquidity.
  • TSB’s statutory loss before tax in 2020 was £204.6 million (2019: £46.0 million profit), with financial performance significantly impacted by the Covid-19 pandemic: 
    • The £90.1 million reduction in total income to £894.8 million (2019: £984.9 million) primarily reflects the adoption of government and regulatory measures in response to Covid-19, lower overdraft income from regulatory driven pricing changes, lower interest rates and reduced consumer spending.
    • The projected economic outlook resulted in a £103.5 million increase in impairment losses to £164.0 million (2019: £60.5 million).
    • The £46.9 million increase in restructuring charges to £90.6 million (2019: £43.7 million) reflects an acceleration in the pace of branch transformation and changes to organisational design. One-off costs also include a £55.0 million provision for estimated charges relating to the treatment of some customers in arrears.
  • Net interest margin (NIM) of 2.47% (2019: 2.75%) was impacted by a lower mix of higher margin unsecured balances, Covid-19 customer support measures and lower interest rates. 
  • Underlying operating expenses of £827.7 million (2019: £847.6 million) reduced by £19.9 million (-2.3%), reflecting TSB’s ongoing progress on efficiency, partly offset by increased investment in enhanced digital capability.
  • The balance sheet remains resilient, with a Common Equity Tier 1 (“CET1”) ratio of 14.8% (2019: 20.6%), Liquidity Coverage ratio of 201% (2019: 231%), and a conservative mortgage portfolio loan-to-value of 44% (2019: 44%). The reduction in the CET1 ratio reflects the previously announced adoption of regulatory changes to TSB’s secured credit risk models, the statutory loss in 2020 and growth in secured retail balances.

Debbie Crosbie, TSB’s Chief Executive, said: "TSB’s underlying performance is much improved. We’re ahead of plan in delivery of our strategy and have relaunched our brand, all of which sets us up well for the future. However, the impact of the pandemic and the additional cost of restructuring overshadows our financial result for the year. 

"We achieved record levels of lending growth in 2020, including mortgage applications exceeding £10 billion in a year for the first time, and we continue to grow deposits. We have also made TSB more efficient, with underlying running costs lower than in 2019. Our balance sheet and capital position remain strong.

"The strategic advantage of our digital platform is evident in the way we are responding rapidly to customers’ needs, including the launch of a new current account, introducing leading mortgage products and improving the overall experience for our customers.

"Throughout a challenging year, TSB colleagues excelled in supporting our customers and I want to thank all of them for their extraordinary service. Our priority going forward is our growth strategy, delivering exceptional customer experience and returning to profitability."

Financial Results

Balance sheet and capital
(£ million)
At 31 Dec 2020 At 31 Dec 2019 Change %
Total customer lending  33,317.9  31,075.8 7.2
Total customer deposits 34,375.3 30,182.4 13.9
Group loan to deposit ratio 97% 103% (6)pp
Common Equity Tier 1 capital ratio 14.8% 20.6% (5.8)pp
Financial performance
(£ million)
At 31 Dec 2020 At 31 Dec 2019 Change %
Total income – management basis 894.8 984.9 (9.1)
Operating expenses – management basis (827.7) (847.6) (2.3)
Impairment losses (164.0) (60.5) 171.1
Management (loss) / profit before tax (96.9) 76.8 n/a
Restructuring costs and other one off items(1) (90.6) (43.7) 107.3
Collection and recovery conduct charges(2) (55.0) - -
Net effect of migration related items(3) 34.1 4.0 752.3
Bank volatility(4) 3.8 8.9 (57.3)
Statutory (loss)/profit before tax (204.6) 46.0 n/a
Net interest margin2     2.47% 2.75% (28)bps
TSB asset quality ratio3 0.51% 0.20% 31bps

(1) Includes the costs of the branch closures and the reorganisation of head office functions.
(2) As more fully described in note 30 to the consolidated financial statements on page 103.
(3) Relates to items arising from the IT migration undertaken in 2018 and includes related income from Lloyds Banking Group of £17.6m, insurance recoveries of £17.5m less additional post migration costs of £1.0m.
(4) Banking volatility reflects gains on derivatives not in hedge accounting relationships, hedge accounting ineffectiveness, and volatility associated with share schemes. 

Accelerating our growth strategy

Our three-year growth strategy, restoring TSB’s competitiveness through a clearer focus on customer needs, was launched in November 2019.

Built on three pillars: customer focus; simplification and efficiency, and operational excellence, the strategy has been key to TSB’s response to the economic disruption during 2020.

As more people switched to online services, we accelerated our digital rollout and branch transformation.

A relentless focus on serving customers and improving their experience

  • We’ve relaunched our brand with a new proposition, Life Made More, new advertising and marketing to highlight the leading products that deliver money confidence, including our new Spend and Save current account.
  • For the first time, we received more than £10 billion of new mortgage applications in a year.
  • To support customers impacted by Covid-19, we granted 40,000 mortgage payment holidays and 74,000 personal loan and credit card payment holidays. 
  • Our support for small and medium-sized businesses through the Bounce Back Loan Scheme reached more than 20,000 businesses with over £0.5 billion of lending. 
  • We reimbursed over 99% of TSB customers that were innocent victims of fraud through the award-winning Fraud Refund Guarantee – showing greater customer care than the rest of the banking industry where the average reimbursement rate is around 38%. 

Accelerating simplification and efficiency to deliver leading digital services to our customers 

  •  Harnessing our modern, multi-cloud, UK based IT platform we’ve accelerated the delivery of our strategy and extended digital services to customers. 
  • We have two million digitally active customers. Over 90% of transactions are processed by TSB through digital or automated channels and over 70% of sales are now through digital channels.  
  • TSB Smart Agent, first introduced in March, has helped more than 550,000 customers and will soon be available on TSB’s mobile app. 
  • We transformed offline processes into simple and easy digital journeys through our partnership with Adobe. We introduced 30 new online forms which have already been used over 500,000 times by customers.
  • We continue to partner with fin-techs, such as ApTap, Wealthify and Square, to offer additional services to our customers. 

Operational excellence – establishing an operating model that’s fit for the future 

  • We recruited 100 roles at the new technology centre in Edinburgh, part of a £120m investment in IT, and expanded our apprenticeship scheme to 60 locations to cover technology and data roles.
  • TSB closed 93 branches in 2020 and we announced plans to right-size and modernise our branch network with further closures in 2021. 
  • We reduced c.600 FTE across the business. 
  • We are investing in our remaining branch network, rolling out self-serve deposit capability and video banking across our network. Furthermore, all branch colleagues have completed money confidence training.

Doing What Matters for society 

TSB’s responsible business strategy, the Do What Matters plan was launched in July 2020.  

Significant progress has been made in its first six months and TSB was the first high street bank to sign up to the Good Business Charter, as well as becoming a signatory to the UN Global Compact. 

Details of what TSB is doing for customers, small businesses, colleagues, communities and the environment are set out here.


The UK enters 2021 in a deep economic downturn with ongoing challenges from the continuing impact of Covid-19, changes as a result of implementing Brexit and a low interest rate environment.

But despite this challenging backdrop, TSB is well positioned as we start the new financial year. TSB remains a low risk, well capitalised bank and has potential for significant value creation in the future. The growth strategy is boosting competitiveness and sharpening the cost-to-serve ratio. Our enhanced digital offer is underpinned by our modern IT platform and we are right-sizing and modernising our branch network to serve customers across the whole country. Our priority in 2021 is continuing to deliver on our growth strategy and returning TSB to profitability.

Media Contacts

George Gordon, Communications & Corporate Affairs Director | 020 7003 9369 | george.gordon@tsb.co.uk

Supreet Thomas, Head of Communications | 07519 502 123 | supreet.thomas@tsb.co.uk

Joseph Eyre, Senior Media Relations Manager | 07483 432 546 | joseph.eyre@tsb.co.uk

Investors and analysts: 020 7155 3888 |  investorrelations@bancsabadell.com

Notes to editors

TSB Banking Group plc’s Annual Report and Accounts for 2020 will be available on 3 February.