Banking levies impact on profits at TSB

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Challenger bank TSB saw its profits in the first six months of the year slump by almost half as it was impacted by merger charges and banking levies.

TSB, which is about to be taken over by Spanish rival Banco de Sabadell in a £1.7bn deal, said its pre-tax profit fell 44 per cent to £23.2m in the half year to the end of June as the lender was also impacted by lower average loan balances.

But the bank added that attracted £1.9bn mortgage applications since January, so far granting £665m of mortgages.

Chief executive Paul Pester hit out at the Government’s plan to introduce an 8 per cent surcharge on bank profits above £25m, which was announced in the summer budget.

He said this should be set 10 times higher at £250m and plans to lobby the Government in a bid to raise the limit.

He added the tax as it stands would add an extra charge in the low teens of millions, which would impact its lending to customers.

Taxpayer-backed Lloyds Banking Group floated TSB last June after the brand was revived to meet the EU rules on state aid, but the return to the stock market has proved short-lived with Sabadell making its takeover offer in March.

TSB said it continued to win new business, saying that its share of new or switched bank accounts totalled 6.7 per cent in the last quarter, the sixth quarter in a row the bank has been above its 6 per cent target.

Mr Pester said: “TSB continues to go from strength to strength. 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.

“We remain unwavering in our mission of bringing more competition to UK banking.”