TSB has revealed a double-digit drop in profits for the first half as it enters the final stage of its takeover by Spanish group Banco Sabadell.
The challenger bank said pre-tax profits were down 20.1 per cent to £44m, while statutory profits fell even further – down 44 per cent to £23.2m in the six months to 30 June.
This was in line with TSB's previous guidance, and was primarily due to lower average loan balances and the Financial Services Compensation Scheme's levy charge of £14.8m.
Statutory profit before tax was further reduced by Sabadell transaction related costs.
Margins nudged up six basis points from 3.63 per cent to 3.69 per cent.
But its Common Equity Tier declined 3.5 percentage points to 19.5 per cent.
Why it's interesting:
The Sabadell takeover is nearing the final stages – TSB will be delisted from 28 July. Investors who backed the business from IPO to takeover would have sold their shares at a premium of more than 30 per cent.
In the run-up to the take over there has been plenty of change.
Sabadell's general manager and chief operations officer Miguel Montes and Tomás Varela, chief financial officer, were appointed to the board as non-executive directors at the end of June.
On the same date, Philip Augar, Norval Bryson and Mark Fisher resigned from the board.
However one thing hasn't changed. TSB is still committed to playing a key role as a challenger bank, with chief executive Paul Pester saying the business would “take on the big banks that have had a stranglehold on the UK market for far too long”.
What they said:
TSB managed to sound upbeat, despite the challenging half year.
Pester said: “Customers are really starting to see TSB as a destination for their mortgages, making us one of the fastest growing mortgage providers in the UK.
“On top of this, customers continue to vote with their feet and, for the sixth successive quarter, we exceeded our target of winning more than six per cent of all customers opening or switching bank accounts in the UK.
“The completion of the Sabadell Group's acquisition of TSB at a premium of over 30 per cent to our IPO share price is recognition of the excellent progress and great potential of the bank.
“We remain unwavering in our mission of bringing more competition to UK banking and, with the extra firepower of Sabadell behind us, we look forward to accelerating our growth plans.