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TSB announces 2024 half year results
TSB reports a statutory profit before tax of £111.6 million for H1 2024
Robin Bulloch, TSB’s Chief Executive Officer, said:
"Our focus in 2024 is making TSB simpler and easier to bank with and I'm delighted to see more customers choosing TSB.
We continue to make good progress against our strategy, and I'd like to thank everyone at TSB for their continued efforts to support our customers and communities, helping them feel more money confident."
Financial Results for H1 2024:
- TSB reported a statutory profit before tax of £111.6 million for the first half of 2024, a decrease of £36.3 million (24.5%) compared to £147.9 million in the first half of 2023. However, compared to H2 2023, statutory profit before tax increased by £22.3 million (+25.0%).
- The main driver of lower profit before tax compared to H1 2023 was lower income, which decreased by £35.8 million (6.1%) to £548.7 million (H1 2023: £584.5 million). This reflected lower mortgage margins in challenging market conditions as well as an increase of £126 million in interest paid to our deposit customers in the period, with net interest margin 22 basis points lower than H1 2023 at 2.62% (H1 2023: 2.84%).
- However, compared to H2 2023 net interest margin was only 5bps lower (H2 2023: 2.67%). This highlights a more positive trend through H1 2024, where both net interest income and net interest margin were higher in Q2 2024 versus Q1 2024.
- Despite ongoing inflationary pressure, operating expenses increased by just 2.2% to £418.0 million (H1 2023: £408.9 million). This increase included the recognition of the new Bank of England bank levy and, excluding this, underlying costs were broadly unchanged.
- Credit impairment charges fell by £8.6 million (31.0%) to £19.1 million (H1 2023: £27.7 million), reflecting an updated and more favourable economic outlook in H1 2024.
- Loans and advances to customers of £36.6 billion decreased by £0.1 billion (0.3%) year on year (June 2023: £36.7 billion) but increased by £0.4 billion (1.1%) compared to the year-end (December 2023: £36.2 billion). This was driven by higher mortgage lending, with stronger application volumes, up £0.9bn (+28.7%), and improved margins in the first half of 2024 compared with the prior year.
- Year-on-year, customer deposits were down by £0.4 billion to £35.0 billion (June 2023: £35.4 billion). However, we have seen a £0.2 billion (0.6%) increase in deposits since the start of the year (December 2023: £34.8 billion) with savings balances the key component of growth, increasing by £0.6 billion. This was partially offset as increased base rates have previously driven more customers to move deposits from current accounts into savings and we have seen this slow in H1 2024, with balance outflows c.£0.5 billion lower than in H2 2023.
- The balance sheet remains resilient with a Common Equity Tier 1 ratio of 16.3% (December 2023: 16.7%) and Liquidity Coverage ratio of 180.0% (December 2023: 203.0%). The fall in the Common Equity Tier 1 ratio since the start of the year reflects higher Risk Weighted Assets.
- In February, TSB paid a £120.0 million final dividend to parent company, Sabadell.
Financial Results
| Balance sheet and capital (£ million) | At 30 June 2024 | At 31 Dec 2023 | At 30 June 2023 | Change vs. Dec 2023 | Change vs. Jun 2023 |
|---|---|---|---|---|---|
Loans and advances to customers
|
36,640.6 | 36,245.9 | 36,740.6 | 1.1% | (0.3)% |
| Customer deposits | 34,984.9 | 34,764.3 | 35,442.7 | 0.6% | (1.3)% |
Loan to deposit ratio
|
105% | 104% | 104% | 1pp | - |
Common Equity Tier 1 Capital ratio1
|
16.3% | 16.7% | 17.3% | 0.4pp | 1pp |
Financial performance
(£ million)
|
H1 2024 | H2 2023 | H1 2023 | Change vs. H2 2023 | Change vs. H1 2023 |
|---|---|---|---|---|---|
Income
|
548.7 | 573.9 | 584.5 | (4.4)% | (6.1)% |
| Operating expenses | (418.0) | (444.0) | (408.9) | (5.9)% | 2.2% |
Impairment losses
|
(19.1) | (40.6) | (27.7) | (53.0)% | (31.0)% |
Statutory profit/
(loss) before tax
|
111.6 | 89.3 | 147.9 | 25% | (24.5)% |
Net interest margin2 |
2.62% | 2.67% | 2.84% | (5)bps | (22)bps |
| Asset quality ratio3 | 0.10% | 0.22% | 0.15% | (12)bps | (5)bps |
1. 1 June 2024 and 2023 exclude unverified half year profits attributable to the shareholder.
2. Net interest income divided by average loans and advances to customers, gross of impairment allowance.
3 .Impairment losses on loans and advances to customers divided by average loans and advances to customer, gross of impairment allowance. Calculated on an annualised basis.
Business Performance Highlights in H1 2024:
Customer Focus
- Over 640,000 TSB products were opened in H1 across our PCA, Overdrafts, Savings, Mortgage Completions, Loans, Cards and General Insurance products – up 8% on the same period last year. Digital channels accounted for over 90% of total sales – 9ppts higher than last year.
- TSB recorded a significant uplift in personal loan sales, which were up 60% compared to H2 2023, and amounted to £450 million of lending.
- TSB's mortgage book grew by £400 million to £33.7 billion. The bank helped almost 4,000 customers buy a new home, with first-time buyers accounting for 55% of all mortgage sales. The value of applications increased by 22%, with completions up 28% on H1 2023.
- TSB prevented 14% more fraud losses in H1 – with £21.8 million of fraudulent payments blocked due to enhanced detection and alerts.
- Over 36,000 new customers switched their account to TSB – which added to the 137,000 new account openings in H1.
- The bank refunded 96% of bank transfer fraud cases in H1 – and continues to lead the industry with its unique approach to fraud refunds.
Service Excellence
- TSB’s Video Banking was an increasingly popular channel – hosting 60% more appointments, with more than 700 taking place every week.
- TSB provided over 80 new offers to customers through its ‘My Rewards’ portal – launched in December 2023. As a result, over 70,000 customers have accessed money-saving offers.
- TSB’s Financial Support Mortgages team won the gold award at the National Contact Centre Awards.
Simplification and Efficiency
- Notable upgrades to the TSB Mobile Banking app took place in H1 2024 – with a new ‘servicing hub’ allowing customers to meet more of their digital banking needs. The app improvements now allow customers to upgrade to the premium Spend & Save Plus account, which contributed to an 8-fold increase in customer take-up.
- TSB continues to serve customers with the seventh-largest branch network in the UK – and its physical presence was bolstered by the addition of two new TSB ‘Pop-ups’. Earlier this year, TSB announced the closure of 36 quieter branches.
Do What Matters
- TSB continued to provide frontline support to victim-survivors of domestic abuse – and provided 114 people with ‘Emergency Flee Fund’ payments of up to £500 to pay for transport, accommodation or sustenance to help them escape a dangerous situation.
- Over 120 TSB colleagues made use of TSB’s industry-leading paid carers leave – with 1,430 paid hours used towards their caring responsibilities.
- TSB’s partnership with Lightning Reach hit the £50,000 milestone of financial grants provided to customers – with over £650 provided on average.
- Through its Money Confident Communities programme, TSB has delivered over 120 financial education workshops, focusing on schools that are under-resourced. Overall, more than 4,000 young people received help to build their Money Confidence.
Outlook
With inflation falling to more normal levels, there is an increased expectation that interest rates will follow suit. There is a strong likelihood, however, that rates will remain higher than we have seen in the years preceding the recent rises.
TSB’s sustained focus on Money Confidence remains highly relevant and our robust capital and liquidity position means we are well placed to continue to support our customers.
*CET1 comment updated on PM, 23rd July, 2024
