TSB First-Half Profits Take 44% Tumble

TSB, the challenger banking group being taken over by a Spanish rival, has reported a 44% fall in profits in the first half of its financial year.

The company said its statutory pre-tax profit for the six months to 30 June came in at £23.2m compared to £41.7m in the previous half-year.

TSB said its earnings were hurt by a number of factors, including the takeover by Sabadell .

Its statement blamed: "Lower average loan balances and the recognition of the full-year Financial Services Compensation Scheme levy charge of £14.8 million in H1 (first half) 2015.

"Statutory profit before tax was further reduced by Sabadell transaction related costs."

The £1.7bn takeover is on course to be completed soon as Sabadell moves, under City rules, to compulsorily buying out the remaining TSB shareholders who were yet to consent to their holdings being sold.

TSB's chief executive, Paul Pester, said its business was going "from strength to strength".

He pointed to the bank delivering a 6.7% share of all new and switching bank accounts in the last quarter - above its target of 6%.

The bank's new mortgage broker service, launched in January, received £1.9bn of gross mortgage applications to the end of June, with gross lending totaling £665m.

Mr 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 the takeover, he added: "The completion of the Sabadell Group's acquisition of TSB at a premium of over 30% 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 and continuing to take on the big banks that have had a stranglehold on the UK market for far too long."