Another day, another challenger bank win, as TSB profits leap
Following yesterday's suggestion that challenger banks are steaming ahead, this morning TSB bolstered that, as profits jumped 53 per cent.
The figures
Pre-tax profits rose 53 per cent from last year to £52.6m in the three months to the end of March, the bank said this morning, while total customer deposits rose 8.4 per cent to £26.8bn.
Meanwhile, lending rose 28.3 per cent to £27..4bn, which the bank said had been pushed up by a record number of customers taking its mortgage products.
Its common equity tier 1 capital ratio – a measure of balance sheet strength – was 17.7 per cent during the quarter, down from 17.8 per cent in the previous quarter.
And it added that 7.1 per cent of all customers opening a new bank account or switching banks went for TSB in the first quarter of the year. Nice.
Why it's interesting
In the last couple of years TSB has gone, in surprisingly quick succession, from Lloyds subsidiary, to public company, to buyout by Spanish lender Banco de Sabadell.
But that upheaval doesn't seem to have harmed the bank: in full-year results unveiled in January, chief executive Paul Pester told Morning Wire TSB was "doing our part to bring more competition to UK banking".
He's not the only one who's convinced: in February a report by Moody's suggested challengers were poised to compete for a bigger share of the UK market. That was borne out in this morning's figures, which showed a record number of people took out TSB mortgages, after it launched three new mortgage products during the quarter.
What TSB said
Pester referenced a long-awaited review into retail banking by the Competition and Markets Authority:
“While I think TSB is doing its bit to break the stranglehold the big five banks have on the UK market, we can’t do this alone. We need the Competition and Markets Authority to use the once in a generation opportunity they have to help us bring the full force of competition to bear on the UK banking market.
"We want all bank customers to know what they’re paying for their banking; all customers – including overdraft users – to be able to switch easily; and all customers to be aware of their right to switch banks. Only then will competition really start to work and the culture of UK banks finally shift to serving customers on their terms – rather than on the banks’.”
In short
TSB continues to build up its share of the UK's retail banking market.