Challenger bank TSB saw its profits in the first six months of the year slump by almost half as it was impacted by merger charges and banking levies.
The lender, which is about to be taken over by Spanish rival Banco de Sabadell in a £1.7 billion deal, said yesterday its pre-tax profit fell 44 per cent to £23.2 million in the half year to end of June as it was also hit by lower average loan balances.
But the bank added that it attracted £1.9bn in mortgage applications since January.
Chief executive Paul Pester hit out at the UK government’s plan to introduce an 8 per cent surcharge on bank profits above £25m from January, announced in the summer Budget.
He said this should be set ten times higher at £250m and plans to lobby ministers to raise the limit.
Taxpayer-backed Lloyds Banking Group floated TSB last June after the brand was revived to meet European Union rules on state aid, but the return to the stock market has proved short-lived with Sabadell making its takeover offer in March.
TSB said it continued to win new business, with its share of new or switched bank accounts at 6.7 per cent in the last quarter, the sixth quarter in a row the bank has been above its 6 per cent target.
Pester said: “TSB continues to go from strength to strength. Customers are really starting to see TSB as a destination for their mortgages, making us one of the fastest growing mortgage providers in the UK.
“We remain unwavering in our mission of bringing more competition to UK banking and, with the extra firepower of Sabadell behind us, we look forward to accelerating our growth plans and continuing to take on the big banks that have had a stranglehold on the UK market for far too long.”
The bank’s half-year results showed underlying pre-tax profits fell 20 per cent to £44m. Its results were dragged lower as it took a full-year charge of £14.8m for the Financial Services Compensation Scheme levy.
TSB is the seventh largest retail bank in the UK, with more than 600 branches.