TSB profits slump as it faces ‘challenging’ mortgage market

TSB said this was due to lower income, which fell by 6.1 per cent to £548.7m for the half-year.

Income was impacted by lower mortgage margins due to “challenging” market conditions in the face of high interest rates, while the company also paid out significantly more interest to its savings customers.

It comes amid a backdrop of UK interest rates sitting at a 16-year high of 5.25 per cent, meaning mortgage rates remain elevated.

The bank also said on Tuesday that it has made “good progress” against its current strategy, which saw the firm cut branches earlier this year.

In the fresh update, TSB said customer deposits were down by £0.4 billion to £35bn year-on-year but it highlighted that deposits were up slightly from the start of the half-year amid demand for key savings accounts.

The bank also reported that credit impairment charges fell by £8.6m to £19.1m for the period.

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.”

The update came as parent firm Banco Sabadell posted an increase in first-half profits.

In May, TSB revealed it was closing 36 branches and cutting 250 jobs across the business.

The job cuts will be in the fraud operations department of the bank, central operations and staff who work at the branches earmarked for closure, the bank said in May.

The latest round of branch closures will start in September, and continue through to May next year.

At the time, trade union Unite said the decision by the UK high street lender was a “grave mistake”.

“These workers perform essential work in the fraud departments and across the branch network,” Unite’s regional officer Andy Case said.

“Through extensive negotiations Unite has been able to substantially reduce the number of jobs at risk.

“However, that isn’t sufficient, the union is pressing TSB to urgently reconsider its damaging bank branch closures plan.”

TSB said it had decided to close the local branches because not enough customers were using them.

About 96 per cent of all the bank’s transactions take place outside of a branch, with the number of in-store transactions falling by 43 per cent over the past four years.

A spokesman for TSB said: “The decision to close a branch is never taken lightly, but our customers are now doing most of their banking digitally and we need to move to a better balance of digital and face-to-face services.

“We remain committed to a national branch network and through innovation and integration with video, telephone, digital, branch and other face-to-face services TSB customers have more ways to bank with us than ever before.”