TSB reports huge increase in quarterly profit

The lender, which was carved out of Lloyds Banking Group and floated in June last year, posted pre-tax profits of £34.2m for the first three months of the year, up from £13.5m in the fourth quarter of last year.

However, TSB saw profits fall year-on-year from £47m in the first quarter of 2014, as the bank invested in an attempt to expand the business reports the FT

The bank last month agreed a 340p a share takeover by Spanish lender Banco Sabadall, which values TSB at £1.7bn. Paul Pester, TSB’s chief executive, said the deal will help the lender expand into the small business banking sector more quickly.

“Sabadell’s heritage is as an SME bank with great SME capabilities,” he said, adding that he would be “hanging around” until after the merger is completed.

TSB saw gross mortgage applications of more than £700m through its new broker service, which launched at the start of the year.

The bank has so far been heavily reliant on a mortgage “enhancement” portfolio bequeathed by Lloyds to help buoy profits.

TSB has come under pressure to boost its asset base after it was created with a £20bn balance sheet, representing only half the amount that was originally intended. Total assets increased by 0.9 per cent over the quarter to £27bn.

The lender also has a relatively high cost base, with a 6 per cent share of the UK’s branch network but launching with only 4 per cent of the personal current account market.

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