TSB has today announced a massive boost to profits for the year to date, as customers come calling despite the recent Brexit vote.
The challenger bank announced statutory profits before tax of £161.6m for the nine months to September, up 229.1 per cent from £49.1m for the same period the year before. Meanwhile, management profit before tax increased to £149.3m, up 95.4 per cent from £76.4m.
Total customer lending also grew to £28.6bn, up 8.5 per cent from £26.4bn at the end of 2015, while total customer deposits rose to £29bn, up 11.9 per cent from £25.9bn.
The bank, which was acquired by Sabadell last year, has also been bumping up its customer numbers, with 6.8 per cent of people who opened or swapped accounts during the year so far picking TSB as their bank of choice.
Why it's important
However, TSB warned it might be a slightly bumpier road up ahead, as not only were lower for longer interest rates taking their toll but a contractual fee it owes to Lloyds was due to increase next year.
The bank also warned its mortgage enhancement portfolio, another part of its business inherited from Lloyds, would roll off during 2018 as customers gradually repaid their outstanding balances. Profits before tax for the division this period were down to £36.1m, a decrease of 26.5 per cent compared with £49.1m the year before.
What TSB said
Paul Pester, TSB chief executive, told City A.M. the bank "definitely saw customers pausing for thought" in the immediate aftermath of the referendum result, including mortgage and loan appointments being cancelled in the days that followed.
However, he added that, as shortly as 10 days after the result was announced, business seemed to be "back on track" as remortgaging applications flooded in throughout August. "We think consumers so far have taken the referendum in their stride," Pester said.
The bank is currently in its third year and Pester added:
When we were standing in our Baker Street branch relaunching TSB back onto high streets...if you had said to me then, 'In three years time, you'll be Britain's most recommended high street bank. In three years time, you'll have grown your customer lending by nearly 50 per cent but you'll still be seeing customers moving to you, that customers will be trusting you with £29bn worth of their savings,' I would have thought you were kidding.