TSB recovers from IT meltdown to return a profit
TSB returned a profit and a healthy balance sheet in 2019 after it stemmed losses from its failed IT migration.
The bank reported that profit before tax for the year to 31 December 2019 was £46m, compared to a pre-tax loss of £105.4m in 2018. It said it was “primarily driven by the non-recurring effect of the net migration-related costs and losses incurred in 2018.”
Customer loans increased by 3.6 per cent to £31.1bn driven predominantly by growth in mortgage lending. Customer deposits increased by 3.7 per cent to £30.2bn.
TSB’s net interest margin fell slightly from 2.87 per cent in 2018 to 2.75 per cent in 2019 due to ongoing competitive pressures and a lower level of unsecured lending. It was partly offset by lower impairment losses.
Debbie Crosbie, TSB’s chief executive, said: “TSB is back to doing what it does best, focusing on serving customers and innovating to meet their needs. We have returned to growth, making good, steady progress in customer loans and deposits.”
In April 2018 an IT failure left millions of TSB customers without access to online banking. The bank was investigated by the Financial Conduct Authority and former chief executive Paul Pester was sacked a few months after the incident.
Earlier this month TSB announced it had handed control of its IT systems to tech giant IBM in a deal to overhaul its banking platforms.
At the time Suresh Viswanathan, TSB’s chief operating officer, said: “Our partnership with IBM marks the next exciting phase in our tech transformation.”
Costs in 2019 increased largely due to strategic investment and business restructuring. TSB announced the creation of a new technology centre in Edinburgh a fortnight ago. The centre, which is set to open in April this year, will create 100 new jobs.
Crosbie today said: “While the market remains competitive, I am confident that with our new strategy and clear purpose, TSB is well positioned to deliver even more for our customers.”