TSB swings to half-year loss as IT migration failures hit earnings
The company said it took a £176.4m hit in the first half of the year.
TSB swung to a loss in the first half of the year, having been “significantly impacted” by major IT migration that sparked a banking meltdown in April.
The bank – which is owned by Spanish lender Sabadell – logged a bottom-line pre-tax loss of £107.4 million for the six months to June 30, compared with a profit of £108.3 million during the same period last year.
Its dismal performance comes after taking a £176.4 million hit linked to its IT migration failures, accounting for customer compensation, foregone income after waiving fees and charges as a result of the service disruption, and the cost of trying to fix operating defects in the system.
TSB said it has now put together a dedicated and experienced team of more than 260 people to ensure that customers are compensated properly and as quickly as possible.
Up to 1.9 million people using TSB’s digital and mobile banking found themselves locked out of their bank accounts following the migration of data on customers from former owner Lloyds’ IT system to a new one managed by current owner Sabadell in April.
Branch services were also affected.
The lender did receive £318 million from Lloyds after extricating itself from its former owner’s platform, but that income was completely offset by the costs linked to the migration.
TSB’s failures have drawn strong criticism from politicians, including those on the Treasury Select Committee who have been scathing in their condemnation and called for TSB’s chief executive, Paul Pester, to be sacked.
Mr Pester said the lender was making progress in resolving the service problems.
“We will continue to work tirelessly until we have put things right. I know how frustrated many customers have been by what’s happened.
“It was not acceptable, and was not the level of service that we pride ourselves on – nor was it what our customers have come to expect from TSB.
“It has been a difficult time for customers and I am grateful to them for their patience.”
While around 20,000 customers opened a new bank account or switched their account to TSB in the second quarter – the period during which the bulk of the disruptions took place – 26,000 switched away from the beleaguered lender.
Total customer deposits fell by 3.1% to £29.6 billion compared with the end of December, and fell by 1.2% year on year.
While current account deposits increased both year on year and since the end of December, it was offset by a planned cut in savings as a result of decisions to manage ISA deposit volumes.
Total customer lending rose 2.8% to £31 billion year on year.
Mr Pester added: “Our priority in the second half of the year continues to be putting things right for our customers.
“Looking further ahead, we are determined to get back to bringing more competition to UK banking and ultimately making banking better for consumers and small businesses.”