TSB's Scots-born boss gives assurance as profits hit by mortgage slowdown

Earlier this year, TSB said it would shut 36 branches amid the migration to digital banking.

TSB’s Scots-born boss has insisted that the bank is making “good progress against our strategy” after he revealed a fall in profits due to weakness in the mortgage market.

The lender, which is part of Spain’s Banco Sabadell, reported a statutory profit before tax of £111.6 million for the six months to June, down 24.5 per cent against the same period a year earlier. TSB said this was due to lower income, which fell by 6.1 per cent to £548.7m for the half-year.

Income was impacted by lower mortgage margins due to “challenging” market conditions in the face of high interest rates, while the group also paid out significantly more interest to its savings customers. It comes amid a backdrop of the official UK bank rate sitting at a 16-year high of 5.25 per cent, meaning mortgage rates remain elevated.

TSB chief executive Robin Bulloch said: “Our focus in 2024 is making TSB simpler and easier to bank with. We continue to make good progress against our strategy, and I’d like to thank everyone at TSB for their continued efforts to support our customers and communities, helping them feel more money confident.”

Edinburgh-based TSB relaunched in 2013 as a separate entity after merging with Lloyds Banking Group in the 1990s and was acquired by Sabadell Group in 2015. In May, TSB said it would shut 36 branches and cut 250 jobs as not enough customers were using the sites.

In the fresh update, the bank said customer deposits were down by £400m to £35 billion year-on-year but it highlighted that deposits were up slightly from the start of the half-year amid demand for key savings accounts. It also reported that credit impairment charges fell by £8.6m to £19.1m for the period.

The group added: “With inflation falling to more normal levels, there is an increased expectation that interest rates will follow suit. There is a strong likelihood, however, that rates will remain higher than we have seen in the years preceding the recent rises.”

It said its “robust capital and liquidity position” meant that it was well placed to continue to support its customers.

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