TSB hit by £105m loss after IT woes
TSB has revealed a loss before tax for 2018 of £105.4 million due to last year’s tech trauma.
This is not a major surprise but compare that to 2017, when it got a profit of £162.7 million.
Richard Meddings, TSB executive chairman, says: “Last year was TSB’s most challenging year. But we enter 2019 with renewed ambition to re-emerge as the leading challenger bank in the UK – firmly on the side of the customer.”
It’s not a challenger bank. Those new faces are here.
He paints a positive picture and says this year the bank will make a “significant” move into business banking. It has a “multi-million-pound” investment programme underway and was named in December as part of the Incentivised Switching Scheme.
That was a disastrous migration – from outsourced legacy tech (provided by Lloyds Banking Group) to its own new platform. It was followed by online banking problems in June, July, August and September.
Also in September, the former CEO Paul Pester stepped down as the company continued to face those banking problems. In November, it aimed for a change of fortunes with the appointment of new CEO Debbie Crosbie. She joins in the spring.
According to TSB’s latest financial results, in total, it has recognised post-migration costs, including customer compensation, additional resources, fraud and foregone income of £330.2 million, partially offset by the provisional recovery of £153 million from TSB’s IT provider, Sabis.
At 31 December 2018, its total customer lending was £30 billion and total customer deposits stood at £29.1 billion.
Around 140,000 customers opened a new bank account or switched their account to TSB in 2018.
However, around 80,000 customers switched their bank account away from TSB in 2018 with volumes peaking in Q2; this compares with around 50,000 customers switching their account away from TSB in 2017.
The bank now has 3.8 million current account customers and over five million customers in total.
TSB says it has resolved around 90% (181,000) of the 204,000 customer complaints received since migration. The bank estimates approximately a quarter of this total would have been received in the “usual course of business”.
In terms of the future, TSB says its new IT system provides a “coherent architecture involving significantly fewer platforms with improved and faster service for customers and partners”.
Current accounts can now be opened in branch in half the time compared with the old system, and online current account openings have returned to underlying pre-migration levels following the launch of an “improved” online application.
The bank adds that mortgage brokers can also submit applications in half the time compared with the old system.