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LONDON (Alliance News) - TSB Banking Group PLC Friday reported an increase in pretax profit from the second quarter to the third, as lower income was more than offset by a drop in operating expenses and less money being set aside for bad customer debts.
In a statement, the bank, in which Lloyds Banking Group PLC still has a 50% stake, said it made a GBP33.1 million pretax profit in the three months ended September 30 and GBP161.6 million in the first nine months of the year as a whole. It made a GBP25.7 million pretax profit in the three months ended June 30.
Net interest income, the difference between what TSB pays out in interest on savings and what it receives on loans, fell to GBP199.3 million from GBP201.6 million in the previous quarter. Operating expenses were 7.1% lower at GBP167.9 million.
However, excluding the cost of the full-year Financial Services Compensation Scheme recognised in the second quarter, underlying operating expenses increased by 2.8% due to the ongoing establishment of the group's support functions and higher investment spend. Costs are expected to be around GBP700 million for the full year, TSB said.
The impairment charge for the three months fell by 3.4% to GBP23.0 million, aided by the improved housing market and reduction in unemployment rates.
TSB said its share of current account gross flow in the quarter was 9.7%. above its 6% long-term target. It also said the build of its mortgage intermediary channel remains on track to launch in the first quarter of 2015, with the absence of the channel being cited as the primary reason net lending to its franchise customers fell by GBP300 million to GBP19.1 billion in the third quarter.
Lloyds sold 38.5% of TSB in an initial public offering in June, before selling a further 11.5% stake in September. Lloyds must sell the rest of its stake in TSB by the end of 2015 in order to comply with European rules that came into play as a result of the state aid received during the financial crisis.
By Samuel Agini; samagini@alliancenews.com; @samuelagini
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