TSB slumps to £205m loss as it counts economic cost of pandemic
Written by Hit Music Radio News on 01/02/2021
TSB has reported a £204.6m annual loss as it counted the economic cost of the COVID-19 pandemic as well as the impact of dozens of branch closures.
The bank, owned by Spanish lender Sabadell, fell into the red last year after posting a profit of £46m in 2019.
It was nearly twice as big as the £105.4m loss suffered in 2018 after TSB experienced an IT meltdown.
The 2020 loss helped Sabadell’s annual profit slump by 99.7% to €2m (£1.7m). The Spanish bank said it expected the UK lender to return to profit this year.
TSB said it had taken a £164m hit to cover the cost of loans going bad thanks to the economic downturn caused by the pandemic – £103.5m higher more than it set aside a year earlier.
It said its overall income was £90.1m lower, much of this due to “the adoption of government and regulatory measures in response to COVID-19”.
That was partly explained by 40,000 mortgage repayment holidays and 74,000 personal loan and credit card holidays during the year as well as waivers on overdrafts.
Lower interest rates – which tend to hurt banks’ profitability – also took their toll.
In addition, the bank faced £90.6m in restructuring costs, nearly twice as high as the figure for a year earlier, as it axed dozens of branches.
It closed 93 sites last year and cut 685 jobs and has already announced plans to shut 164 this year with the loss of 969 roles, pointing to a shift towards online banking that has been accelerated by the pandemic.
TSB said it saw record lending growth in 2020, including mortgage applications worth more than £10bn for the first time.
Overall, loans rose by 7.2% to £33.3bn, also partly due to business lending through the government-backed bounce-back loan scheme to help firms hit by the pandemic.
Chief executive Debbie Crosbie said the bank’s underlying performance was “much improved”.
“However, the impact of the pandemic and the additional cost of restructuring overshadows are financial result for the year,” she added.
The bank said: “The UK enters 2021 in a deep economic downturn with ongoing challenges from the continuing impact of Covid-19, changes as a result of implementing Brexit and a low interest rate environment.
“But despite this challenging backdrop, TSB is well positioned as we start the new financial year.”
© Sky News 2020