By Ian Walker
LONDON--TSB Banking Group PLC (TSB.LN) Friday reported a 29%
rise in pretax profit over the past three months, boosted by lower
impairment and lower costs. The firm said it is on track to provide
mortgages through brokers from the first quarter of next year.
TSB, which was spun-off by Lloyds Banking Group PLC (LYG) in
June, said it had picked up nearly one in 10 new customer accounts
in the period, "well ahead of our long term target."
"The strong current account performance is one of the factors
that has enabled us to grow our customer deposits by 0.5 billion
pounds ($0.8 billion) to GBP24.2 billion," Chief Executive Paul
Hester said.
Shares at 0745 GMT up 3 pence, or 1.16%, at 262 pence.
TSB made a pretax profit for the quarter ended Sept. 30 of
GBP33.1 million, up from GBP25.7 million for the earlier quarter
ended June 30. On a management, or adjusted basis, pretax profit
rose 32% to GBP41.6 million.
Net interest income for the quarter slipped to GBP199.3 million,
from GBP201.6 million, and operating expenses fell 7.1% to GBP167.9
million. It booked an impairment charge of GBP23 million, down from
GBP23.8 million in the earlier quarter.
TSB said it remains strongly capitalized with a pro forma common
equity tier 1 capital ratio of 18.8%, compared with 18.2% at June
30.
"While it remains a five year journey, TSB continues to build on
the strong start to life as an independent listed business. Our
performance has been in line with expectations and reinforces our
credentials as Britain's Challenger Bank," TSB said.
TSB is launching a new intermediary channel enabling brokers to
sell its mortgages. The bank, which already has a mortgage loan
portfolio that was assigned to it by Lloyds, said it expects to
begin testing the new distribution platform in December ready to
receive the first mortgage applications through the channel in
January.
Net lending to TSB's franchise customers fell GBP0.3 billion to
GBP19.1 billion in the third quarter, given the absence of a
mortgage intermediary distribution channel, the bank said. Loans
and advances to customers fell 2.1%, or GBP477 million compared
with June 2014.
It expects falls in both mortgages and loans to continue for the
rest of the year before the intermediary channel is operational in
2015.
Lloyds still holds 50% of TSB. It was ordered by the European
Union in 2009 to sell at least 600 branches as a condition of state
aid. The FTSE100-listed financial-services firm, which is still
24.9% owned by the U.K. Government, must divest its remaining
shares in TSB by the end of next year.
-Write to Ian Walker at ian.walker@wsj.com
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