By Chris Dorrell
TSB Bank has proposed a £50m payout to its parent company in the first quarter of 2023 as its yearly pretax profit increased to a record level.
Pretax profit in the 2022 financial year rose to £183.5m from £157.5m in 2021, reflecting lending growth, higher interest rates and higher deposit margins.
This figure includes the costs of a £48.7m fine relating to IT issues after TSB and its parent company Sabadell merged their computer systems. Over two million customers were locked out of their accounts for weeks after the transfer.
Customer deposits increased by £36.3bn reflecting strong growth in retail savings, offsetting a reduction in current account balances reflecting increased consumer spending.
The bank’s CET1 ratio – the highest tier of capital – stands at 17.1 per cent.
Reflecting fears of an economic slowdown and an uptick in bad loans, credit impairment charges increased to £54.9m from £0.1m last year, when the bank had exceptionally low charges following Covid-related impairment releases.
The bank said the increase in impairment charges in 2022 was a result of the “uncertain economic outlook” and growing inflationary pressures.
TSB noted that ongoing regulatory change – from consumer duty to evolving capital regulations – requires the bank to consider new standards, but it said it is “well-placed to deliver”.
Robin Bulloch, TSB’s Chief Executive, commented: “We have delivered a strong set of results for 2022. This includes balance sheet growth, reduced underlying costs, and improved overall profitability. And, for the first time, TSB will pay a dividend to our parent company, Sabadell.”
TSB was sold to Banco Sabadell in 2015 by Britain’s largest mortgage lender, Lloyds Bank, for £1.7bn.
In September last year there were rumours Banco Sabadell was looking to sell TSB, which had been underperforming for years until it swung to profit in the 2021 financial year.
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