TSB profits drop 44%

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. It said a mortgage broking service launched in January had received 1.9 billion pounds of gross mortgage applications at the end of the first half, with gross lending through this channel totalling 665 million.

Chief executive Paul Pester hit out at the UK government’s plan to introduce an 8 per cent surcharge on bank profits above £25m from January, announced in the summer Budget.

He said this should be set 10 times higher at £250m and plans to lobby the Government in a bid to raise the limit.

In addition, the bank said it delivered a 6.7% share of flow of all new and switching bank accounts in the most recent quarter, marking the sixth consecutive quarter where it exceeded its 6% target.

Mr Pester said: “TSB continues to go from strength to strength”. “My understanding is that the real income from this tax will be raised on the 2 to 5 billion pounds worth of profit that the big banks make, rather than on the hundred or so millions of profit that banks like TSB make”, Pester said.

“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”.

There was also an impact from lower average loan balances, a £14.8mln payment to the 2015 financial services compensation scheme levy and costs related to the impending Sabadell takeover.

British lawmakers and regulators want to break the dominance of Lloyds, Royal Bank of Scotland (RBS.L), Barclays (BARC.L), HSBC (HSBA.L) and the UK arm of Spain’s Santander (SAN.MC), which together control more than four out of five personal current accounts in Britain.