TSB Bank plc announces 2021 results

TSB reports statutory profit before tax of £157.5 million

Financial Results for the full year 2021:

• This has been a successful year for TSB. Statutory profit before tax for 2021 was £157.5 million, against a pre-tax statutory loss of £204.6 million in 2020. This reflects an improved economic outlook, sustained balance sheet growth and focused cost efficiency.  
• Total customer lending at £37.4 billion increased by £4.1 billion (+12.2%) in 2021, with growth driven by a record £9.2 billion of gross mortgage lending.  
• Customer deposits at £36.0 billion increased by £1.6 billion (+4.6%) in 2021, reflecting a slower rate of growth compared to 2020 as consumer spending increased. 
• Total income, as measured on a management basis, increased £85.3 million (+9.5%) to £980.0 million. This reflects core mortgage balance growth and higher current account income. A lower proportion of unsecured balances is the primary driver of a 0.03% reduction of TSB’s Net Interest Margin to 2.44%.  
• We have continued to simplify the business with operating expenses, reported on a management basis, decreasing £30.4 million (-3.7%) to £797.3 million, reflecting lower resource and property costs and a more normalised level of investment spend.  
• The net impact of one-off items represented a cost of £25.1 million in 2021 (2020: £107.7 million). This primarily reflects lower restructuring and branch transformation costs, a significantly lower remediation charge relating to the treatment of some customers in arrears, and lower migration related income. 
• Credit impairment charges have decreased significantly to £0.1m (2020: £164.0 million). This primarily reflects the release of impairment provisions which won’t be repeated in 2022, driven by the improving economic outlook and resilient customer lending portfolios.    
• The balance sheet remains resilient, with a Common Equity Tier 1 ratio of 15.8% and Liquidity Coverage ratio of 194%.  
• These results demonstrate TSB is on track to deliver balance sheet growth, cost efficiency and profitability as set out in the 2019 growth strategy.  

Robin Bulloch, TSB’s Chief Executive (Interim), said: “This is a great set of results. With a focus on delivering our Money Confidence purpose, we have seen outstanding income growth in 2021, made improvements in the products and services we offer customers, and become a more efficient and resilient bank.

“I want to thank everyone at TSB for their collective efforts in delivering this, as well as their ongoing work to help our customers and communities feel more money confident.” 

Financial Results

(1) Fully loaded basis.
(2) Reflects losses and gains on derivatives partially mitigated by the use of hedge accounting, where relevant criteria are met, and volatility associated with share schemes. 
(3)  Management basis net interest income divided by average loans and advances to customers, gross of impairment allowance. 
(4)  Impairment losses divided by average loans and advances to customer, gross of impairment allowance. Calculated on an annualised basis. 
 

Strong progress against the growth strategy set in 2019

A relentless focus on serving our customers

• TSB had a record year for new mortgage lending as we responded rapidly to the changing mortgage market and transformed the way we serve customers. Video banking now accounts for over 70% of customer meetings and of these over 25% were out of hours. We were also recognised for ‘Best Fixed Rate Lender’ and ‘Best Direct Lender’ by the ‘What Mortgage’ awards.  
• TSB is the only bank with a Fraud Refund Guarantee, and we publish our reimbursement rates in full, refunding over 97% of customers who are innocent victims of fraud.  
• We continue to grow our business banking customer base and opened over 17,000 Business Current Accounts in 2021. In addition, TSB was awarded £6 million from Banking Competition Remedies to further develop its business banking proposition for customers.  
• We launched a new partnerships marketplace to give more Money Confidence to customers, for example: Wealthify enables customers to invest; Freedom Finance offers customers alternative lending solutions; and Cogo enables customers to understand and instantly see the carbon footprint of their spending. 

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

• Over 90% of all bank transactions and 75% of all product sales are through our digital channels. 
• Mobile continues to be the channel of choice for TSB customers. Three-quarters of our digitally active customers now use the mobile app, and it is the sole digital channel for more than half of them.  
• TSB Smart Agent has supported over 1.1 million customer conversations online, of which over 485,000 were in the mobile app. 

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

• TSB continues to transform its physical footprint to meet the changing needs of its customers while maintaining a national network. 153 branches were closed in 2021 and 70 branches will close in 2022. Following these changes TSB will have 220 branches and retain the 7th largest network.  

• We have also upgraded 135 branches in 2021 to create more inviting spaces for customers, which focus on interactions over transactions. Over 60% of branches are equipped with self-serve deposit capability and all branches have access to video banking.  

• We opened over 40 ‘pop-up’ services in communities across the country where it takes longer to get to the nearest branch. TSB is also taking part in UK Finance’s Community Access to Cash pilots.  

Doing What Matters for Society

The Do What Matters Plan sets out our goals and actions as a responsible business. TSB remains the first high street bank to be accredited by the Good Business Charter and is also a signatory to the UN Global Compact. In 2021: 

• Women now make up 41% of our senior roles, well above the sector average (32%) and a rise of one percentage point over the year.  
• Our new equal parental leave policy makes us one of the first major employers in financial services to offer leave that is inclusive for all parents, regardless of gender, and includes adoption and co-parenting.  
• We announced a pathway to Net Zero operational emissions by 2030 and became signatories to the industry-led UN-convened Net-Zero Banking Alliance. 
• We are signatories of the Small Business Commissioner’s prompt payment code – 97% of payments to small and medium businesses were made in an average of 7 days.   
• Working with the charity Hestia, we were the first bank to offer Safe Spaces for victims of domestic abuse in all our branches. 

Outlook

Looking ahead, the economic environment remains difficult to predict. Uncertainty about the pace and strength of recovery into 2022 continues as consumer spending begins to level off and inflation impacts both household and business budgets.

The level of regulatory change across the industry remains elevated, bringing its own challenges, such as the new standards relating to consumer duty, ongoing evolution of capital regulations, and expectations for corporate reforms through government consultations.

TSB’s robust capital and liquidity position means we are well placed to navigate these headwinds.  We remain on track to deliver balance sheet growth, cost efficiency and profitability as set out in the 2019 growth strategy and will not ease the pace of delivery.

In the face of the pandemic, the business has developed an operational resilience, tenacity and action-oriented customer focus that will make us even more competitive in 2022.