TIDMTSB TIDM49WI TIDMLLOY
RNS Number : 6183L
TSB Banking Group PLC
29 April 2015
TSB Banking Group plc
Results for the 3 months to 31 March 2015
Key highlights
Recommended offer from Banco de Sabadell (Sabadell)
- TSB received a 340p per share cash offer for the entire
business, which has been recommended by the Board to the Group's
shareholders.
Financial
3 months 3 months
to 31 to 31
March Dec
2015 2014
GBP GBP
million million Change
============================================ ======== ======== =======
Franchise profit/(loss) before tax 16.8 (5.7)
============================================ ======== ======== =======
Mortgage Enhancement profit before
tax 17.4 19.2
============================================ ======== ======== =======
Management profit before tax higher
given skewed investment and marketing
spend in Q4-14 34.2 13.5 153.3%
============================================ ======== ======== =======
Statutory profit before tax increased
primarily as a result of higher management
profit 34.3 8.6 298.8%
============================================ ======== ======== =======
Franchise banking net interest margin(1)
in line with previous guidance 3.71% 3.65% 6bps
============================================ ======== ======== =======
Group asset quality ratio(2) reflects
underlying economic improvement and
effect of one-offs 0.35% 0.43% 8bps
============================================ ======== ======== =======
Franchise customer lending declined
at the slowest rate in over a year 18,708.6 18,839.3 (0.7)%
============================================ ======== ======== =======
Franchise loan to deposit ratio continues
to reduce, creating headroom for growth 75.6% 76.5% (0.9)pp
============================================ ======== ======== =======
Pro forma CET 1 ratio(3)(7) remains
strong 19.8% 19.7% 0.1pp
============================================ ======== ======== =======
Strategic delivery
- 7.9% share of all new and switching bank accounts in the last
quarter(4) marks the 5th consecutive quarter where the Group has
delivered above its target of 6% share.
- Received over GBP700 million of gross mortgage applications
through the newly launched TSB mortgage broker service to the end
of the first quarter. TSB named mortgage lender of the quarter by
Mortgage Strategy Magazine(5) .
- Improving customer satisfaction was sustained as TSB's net
promoter score(6) increased by 5 points to 14 in the quarter, the
5th consecutive quarter of improvement.
- Continued to invest in digital and branch proposition
including the launch of a new mobile banking app, enlarging the
digital team and launching of the first new look TSB branch in
Enfield.
"TSB is starting to fire on all cylinders as we take on the big
banks in our mission to bring more competition to UK banking.
Over 7.9% of people opening or switching a bank account in the
last quarter chose TSB - meaning we've now had five quarters in a
row where we've beaten our 6% target; our mortgage broker service
has continued its flying start, having received over GBP700 million
of applications by the end of March, and more customers than ever
before are recommending TSB to friends and family.
Whilst we still have a long way to go in bringing better banking
to UK consumers, we're making real progress. This is reinforced by
Banco de Sabadell's recommended offer to acquire TSB, which is a
real vote of confidence in everything we've achieved so far and in
our potential to succeed further in the future".
Paul Pester
Chief Executive Officer
(1) - (7) See explanatory notes on page 3.
Contents
Page
Summary results 3
Strategic update 4
Business review 6
Appendices
1. Statutory consolidated balance sheet (unaudited) 7
2. Statutory summary consolidated statement
of comprehensive income (unaudited) 8
3. Quarterly results summary by segment (unaudited) 9
4. Reconciliation of management basis of statutory
results (unaudited) 10
Basis of presentation
This statement presents the consolidated results
of TSB Banking Group plc and its subsidiaries (the
Group) for the three months to 31 March 2015.
Management basis
In order to present a more useful view of business
performance, the Group's results are presented
on a management basis which for the three months
to 31 March 2015 excludes volatility arising from
derivatives and costs arising from the Sabadell
offer to acquire the shares of the Group.
Reporting segments
TSB is a provider of retail banking services in
Britain and is organised, managed and reported
across two business segments:
* Franchise, the Group's multi-channel retail banking
business; and
* Mortgage Enhancement, a mortgage loan portfolio that
was assigned to the Group by Lloyds Banking Group
(LBG) with effect from 28 February 2014 in response
to a review by the Office of Fair Trading of the
effect on competition of the divestment of TSB. This
is designed to enhance the Group's profitability by
over GBP230 million.
=============================================================
Forward looking statements
This announcement contains forward looking statements with
respect to the business, strategy and plans of the TSB Banking
Group, its current goals and expectations relating to its future
financial condition and performance. Statements that are not
historical facts, including statements about the Group or the
Group's management's beliefs and expectations are forward looking
statements. By their nature, forward looking statements involve
risk and uncertainty because they relate to future events and
circumstances that will or may occur. The Group's actual future
business, strategy, plans and/or results may differ materially from
those expressed or implied in these forward looking statements as a
result of a variety of factors, including, but not limited to, any
acquisition of TSB Banking Group resulting from the recommended
offer by Sabadell; UK domestic and global economic and business
conditions; the ability to access sufficient funding to meet the
Group's liquidity needs; risks concerning borrower or counterparty
credit quality; instability in the global financial markets,
including Eurozone instability and the impact of any sovereign
credit rating downgrade or other sovereign financial issues;
market-related risks including in relation to interest rates and
exchange rates; changing demographics and market-related trends;
changes in customer preferences; changes to laws, regulation,
accounting standards or taxation, including changes to regulatory
capital or liquidity requirements; the policies and actions of
governmental or regulatory authorities in the UK or the European
Union or other jurisdictions in which the Group operates; the
implementation of the Recovery and Resolution Directive and banking
reform following the recommendations made by the Independent
Commission on Banking; the ability to attract and retain senior
management and other employees; the extent of any future impairment
charges or write-downs caused by depressed asset valuations, market
disruptions and illiquid markets; the effects of competition and
the actions of competitors, including non-bank financial services
and lending companies; exposure to regulatory scrutiny, legal
proceedings, regulatory investigations or complaints and other
factors. The forward looking statements contained in this
announcement are made as at the date of this announcement and the
Group undertakes no obligation to update any of its forward looking
statements.
Summary results
Summary balance sheet
At
31 March At
2015 31 Dec
GBP 2014 Change
million GBP million %
================================ ========= ============ ======
Loans and advances to customers 21,386.2 21,641.4 (1.2)
================================== ========= ============ ======
Other assets 6,016.7 5,530.0 8.8
================================== ========= ============ ======
Total assets 27,402.9 27,171.4 0.9
================================== ========= ============ ======
Customer deposits 24,733.6 24,624.9 0.4
================================== ========= ============ ======
Other liabilities 1,006.6 912.1 10.4
================================== ========= ============ ======
Shareholders' equity 1,662.7 1,634.4 1.7
================================== ========= ============ ======
Total equity and liabilities 27,402.9 27,171.4 0.9
================================== ========= ============ ======
Franchise loan to deposit ratio 75.6% 76.5% (0.9)pp
======================================= =========== =========== =======
Net asset book value per share (pence) 333p 327p 6p
======================================= =========== =========== =======
Common Equity Tier 1 Capital ratio(7) 23.0% 23.0% -
======================================= =========== =========== =======
Risk-weighted assets GBP6,941.9m GBP6,930.2m 0.2%
======================================= =========== =========== =======
Pro forma Common Equity Tier 1 Capital
ratio(3)(7) 19.8% 19.7% 0.1pp
======================================= =========== =========== =======
Leverage ratio(7) 5.7% 5.8% (0.1)pp
======================================= =========== =========== =======
Summary income statement
3 months 3 months 3 months
to 31 to 31 to 31
March Dec March
2015 2014 2014
GBP GBP Change GBP
million million % million
================================================ ======== ======== ====== ========
Net interest income 192.3 197.2 (2.5) 189.0
================================================= ======== ======== ====== ========
Other income 30.5 34.5 (11.6) 38.1
================================================= ======== ======== ====== ========
Total income 222.8 231.7 (3.8) 227.1
================================================= ======== ======== ====== ========
Operating expenses (169.8) (194.7) 12.8 (152.8)
================================================= ======== ======== ====== ========
Impairment (18.8) (23.5) 20.0 (27.3)
================================================= ======== ======== ====== ========
Profit before taxation (management basis) 34.2 13.5 153.3 47.0
================================================= ======== ======== ====== ========
Gain/(loss) on derivatives and hedge accounting 4.4 (0.4) (0.6)
================================================= ======== ======== ====== ========
Derivative fair value unwind (3.0) (4.5) (7.3)
================================================= ======== ======== ====== ========
Sabadell transaction costs (1.3) - -
================================================= ======== ======== ====== ========
Defined benefit pension scheme settlement gain - - 63.7
================================================= ======== ======== ====== ========
Statutory profit before taxation 34.3 8.6 298.8 102.8
================================================= ======== ======== ====== ========
Taxation (7.4) (1.8) (21.1)
================================================= ======== ======== ====== ========
Statutory profit for the period 26.9 6.8 295.6 81.7
================================================= ======== ======== ====== ========
Group banking net interest margin(1) 3.61% 3.57% 4bps 3.62%
================================================= ======== ======== ====== ========
Franchise banking net interest margin (1) 3.71% 3.65% 6bps 3.64%
================================================= ======== ======== ====== ========
Group management basis cost:income ratio 76.2% 84.0% 7.8pp 67.3%
================================================= ======== ======== ====== ========
Group asset quality ratio (AQR)(2) 0.35% 0.43% 8bps 0.52%
================================================= ======== ======== ====== ========
Other key performance indicators
Quarter Quarter Quarter
to to to 31
31 March 31 Dec March
2015 2014 Change 2014
================================================ ========= ======= ======= =======
Mortgage gross new lending (GBP million) 479.0 404.5 18.4% 316.0
================================================= ========= ======= ======= =======
Share of new personal bank account openings(4) 7.9% 8.0% (0.1)pp 6.7%
================================================= ========= ======= ======= =======
Customer advocacy - net promoter score (NPS)(6) 14 9 5 (13)
================================================= ========= ======= ======= =======
(1) Management net interest income divided by average loans and
advances to customers, gross of impairment provisions.
(2) Impairment charge on loans and advances to customers divided
by average loans and advances to customers, gross of impairment
allowance.
(3) Pro forma is calculated to reflect the Franchise Unsecured
customer lending portfolios calculated on an Internal Ratings Based
(IRB) basis. Currently, these portfolios are calculated on the
standardised basis approach. The Group plans to migrate, subject to
PRA approval, these to an IRB basis by June 2015.
(4) Source: CACI Current and Savings Account Market Database
(CSDB) which includes current, packaged, youth, student and basic
bank accounts, and new account openings excluding account upgrades.
Data presented on a two month lag each quarter.
(5) Joint lender of the quarter for Q1 2015 - Mortgage Strategy Magazine (11/02/2015).
(6) NPS is based on the question "On a scale of 0-10, where 0 is
not at all likely and 10 is extremely likely, how likely is it that
you would recommend TSB to a friend or colleague?" NPS is the
percentage of TSB customers who score 9-10 after subtracting the
percentage who score 0-6.
(7) Excludes unaudited retained statutory profit for the 3
months to 31 March 2015 which would contribute 0.4% to CET1, 0.3%
to Pro forma CET1 and 0.1% to Leverage ratio.
Strategic update
Recommended offer by Sabadell
As announced on 20 March 2015, the boards of TSB and Sabadell
have reached an agreement on the terms for Sabadell to acquire TSB.
We believe this offer represents a significant endorsement of the
progress TSB has made. We believe it provides our shareholders with
the opportunity to receive in cash today the value that may have
otherwise been unlocked over time as TSB executes its strategy and
realises its longer term growth prospects, while removing the risks
inherent in the delivery of that growth plan.
Sabadell expects to support and accelerate TSB's retail growth
strategy and the expansion of TSB's presence in the SME sector.
Sabadell intends to continue to operate TSB as a robust competitor
in the UK banking market, building on the TSB brand name.
The Sabadell transaction continues to progress. However we
remain focused on achieving our strategy to grow the business and
bring more competition to UK banking. In the first quarter of 2015
TSB continued to make good progress with a continuing focus on the
three key components of our growth strategy as follows:
1. Provide great banking to more people
Grow market share of bank accounts by consistently taking a
greater than 6% share of gross flow over a five year period.
- In the most recent quarter, TSB delivered a 7.9% share of flow
of all new and switching bank accounts, the 5th consecutive quarter
where we exceeded our 6% target.
- This continued strong performance reflects the strength of the
TSB brand and our competitive bank account offering and also helped
to increase customer deposits by a further GBP108.7 million in the
quarter.
2. Help more people borrow well
Grow Franchise customer lending by 40% to 50% over a five year
period from IPO.
- We have made strong early progress since launching our
mortgage intermediary distribution channel in January 2015, with
over GBP700 million of applications received to the end of the
first quarter, approximately GBP100 million of completions in the
first quarter and we were named mortgage lender of the quarter by
Mortgage Strategy Magazine. We have also increased the products on
offer through this channel and, having initially focused on house
purchase mortgages, now offer re-mortgage products and have begun a
pilot for buy-to-let mortgages.
- Our successful re-entry into the mortgage intermediary channel
has helped to slow the trend of declining Franchise mortgage
balances seen in 2014.
- Unsecured lending remained relatively flat in a congested and competitive environment.
3. Provide the kind of banking experience people want and deserve
Deploy TSB's strong digital capability. Build greater
consideration of the TSB brand. Deliver a differentiated customer
experience through our Partners.
- We have continued to invest in our digital proposition,
launching our new mobile banking app which makes it simpler for our
customers to bank with us wherever they may be. In addition, we are
doubling the size of our digital banking team to support the
further improvement of our digital proposition.
- Now that it is 18 months since we launched TSB back onto high
streets across Britain, and almost a year since the end of our
co-servicing agreement with Lloyds, we now have a much clearer
picture of how our customers are using our branches. In response,
we have extended the opening hours for almost 400 of our branches
and 328 are now open on a Saturday. We have also reviewed 15
locations across the UK where we have two or more branches within
approximately 500 metres of each other. As customers tend to use a
particular branch in these locations, we have developed plans to
invest in the preferred branch before closing the other branches
nearby. As a result we will absorb 17 lesser used branches into the
15 more popular branches. Enfield is the first of our refurbished
and re-launched branches and will be followed by the closure of our
other Enfield branch only 170 metres away.
- Evidence of the progress is reflected in our Bank net promoter
score, which improved by a further 5 points this quarter, the 5th
consecutive quarter of improvement.
Summary and outlook
TSB has continued to build on the strong start made in 2014.
The Sabadell transaction continues to progress and we remain
resolutely focused on delivering our growth strategy and bringing
more competition to UK banking.
The first quarter of 2015 has been another period of strong
progress in continuing to establish TSB's credentials as Britain's
challenger bank. Our Q1 2015 financial performance was in line with
our expectations and we are continuing to make solid progress with
our strategic delivery, particularly with regards to the mortgage
intermediary channel.
Certain challenges remain however, particularly the sustained
low interest rate and competitive environment. Given this
environment we continue to expect the Franchise margin to be
broadly flat in 2015 compared to 2014, with margin expansion early
in the year offset by negative factors in the second half. The 2015
exit rate for margin is expected to be notably lower than the
average for the year. We also continue to expect other income to
come under modest pressure given the early implementation of
reduced interchange fees and lower Added Value fees contributing to
a circa GBP15 million reduction in Franchise other income in 2015
compared to 2014.
During 2015, cost management will allow the effects of these
headwinds to be mitigated and we continue to target expenditure of
no more than GBP720 million in 2015 whilst continuing to deliver
our growth strategy including increasing the balance of Franchise
lending by over GBP1.5 billion in 2015 and consistently taking more
than a 6% share of all new and switching bank accounts each
quarter.
Business review
Review of the balance sheet
Customer loans and advances
Loans and advances decreased by 1.2% in the first quarter of
2015 to GBP21,386.2 million. This was primarily due to the ongoing
expected repayment of the Mortgage Enhancement portfolio which
decreased by 4.4%. Franchise loans and advances decreased by 0.7%,
representing the smallest quarterly decrease since TSB's separation
from LBG in 2013 and reflected the success of the new intermediary
channel following its launch in January 2015.
Impairment on loans and advances
Impaired loans as a percentage of loans and advances to
customers remained unchanged at 0.9% (31 December 2014: 0.9%).
Impaired loans decreased by 9.2% driven by continued favourable
economic conditions. Provisions as a percentage of impaired loans
were marginally higher at 43.1% compared to 42.0% at 31 December
2014.
Funding and liquidity
The Group continued to attract new customers and retain existing
deposit balances which led to a 0.4% increase in deposit balances
during the quarter to GBP24,733.6 million. As a result the
Franchise loan to deposit ratio at 31 March 2015 was 75.6% (31
December 2014: 76.5%).
Capital management
The capital position of the Group remains strong with a pro
forma Common Equity Tier 1 (CET1) Capital ratio of 19.8% (31
December 2014: 19.7%) and a leverage ratio of 5.7% (31 December
2014: 5.8%).
Review of financial performance
Q1 2015 compared to Q4 2014
Group profit before tax on a management basis for the three
months to 31 March 2015 increased by 153.3% to GBP34.2 million
compared to Q4 2014. This increase primarily reflected lower costs
and a continued improvement in impairment partially offset by lower
income.
Income fell by 3.8% reflecting the effects of lower lending
balances and a decrease in other income. Other income was 11.6%
lower and primarily reflects the previously guided effect of market
reforms to interchange fee income and the fact that Added Value
current accounts remain available only through the digital channel.
These factors were partially offset as the Group banking net
interest margin improved by 4bps to 3.61%, as expected, primarily
driven by lower deposit costs.
Operating expenses decreased by 12.8% given the high marketing
and investment spend in Q4 2014 but is also reflective of the
continuing and successful business focus on managing costs in the
current low interest rate environment.
The impairment charge decreased by 20.0% reflecting the
continued effect of the favourable UK economic environment, one off
charges in Q4, including an increase in the unsecured loss
emergence period, and a GBP1m benefit from net releases in Q1.
Q1 2015 compared to Q1 2014
Group profit before tax on a management basis decreased by 27.2%
compared to Q1 2014 primarily reflecting higher costs, partially
offset by continued improvement in impairment losses.
Total income decreased by 1.9% reflecting a decrease in interest
income from lower Franchise lending balances and a decrease in
other income reflecting lower Added Value fee income. These were
partially offset by higher earnings from the Mortgage Enhancement
portfolio where the comparative period did not recognise a full
quarter of earnings as it was transferred to the Group with effect
from 28 February 2014.
Operating expenses were 11.1% higher reflecting the
establishment of the Group's stand alone cost base during 2014, in
particular completion of the build of the corporate support
functions during 2014 and increased investment spend.
Impairment charge decreased by 31.1% reflecting the favourable
UK economic environment. Group AQR decreased to 0.35% from 0.52% in
Q1 2014.
Appendix 1:
Statutory consolidated balance sheet (unaudited)
At At
31 March 31 Dec
2015 2014
GBP GBP
million million
========================================= ========= =========
Assets
========================================= ========= =========
Cash and balances at central banks 4,411.9 4,396.3
============================================ ========= =========
Loans and receivables:
========================================= ========= =========
Loans and advances to customers 21,386.2 21,641.4
============================================ ========= =========
Loans and advances to banks 143.2 134.5
============================================ ========= =========
Available-for-sale financial assets 654.4 339.7
============================================ ========= =========
Items in course of collection from banks 220.7 135.7
============================================ ========= =========
Deferred tax assets 103.6 108.1
============================================ ========= =========
Property, plant and equipment 148.6 149.2
============================================ ========= =========
Other assets 196.5 143.4
============================================ ========= =========
Derivative financial assets 137.8 123.1
============================================ ========= =========
Total assets 27,402.9 27,171.4
============================================ ========= =========
Liabilities
========================================= ========= =========
Customer deposits 24,733.6 24,624.9
============================================ ========= =========
Deposits from banks - 32.5
============================================ ========= =========
Debt securities in issue 10.0 10.0
============================================ ========= =========
Subordinated liabilities 413.4 405.5
============================================ ========= =========
Items in course of transmission to banks 197.5 144.6
============================================ ========= =========
Other liabilities 183.1 202.8
============================================ ========= =========
Derivative financial liabilities 202.6 116.7
============================================ ========= =========
Total liabilities 25,740.2 25,537.0
============================================ ========= =========
Equity
========================================= ========= =========
Share capital 5.0 5.0
============================================ ========= =========
Share premium 965.1 965.1
============================================ ========= =========
Merger reserve 616.5 616.5
============================================ ========= =========
Available-for-sale reserve 1.0 0.4
============================================ ========= =========
Cash flow hedging reserve 0.8 -
============================================ ========= =========
Capital reorganisation reserve (1,311.6) (1,311.6)
============================================ ========= =========
Capital reserve 410.0 410.0
============================================ ========= =========
Retained profits 975.9 949.0
============================================ ========= =========
Shareholders' equity 1,662.7 1,634.4
============================================ ========= =========
Total equity and liabilities 27,402.9 27,171.4
============================================ ========= =========
Appendix 2:
Statutory summary consolidated statement of comprehensive income
(unaudited)
3 months 3 months
to 31 to 31
March March
2015 2014
GBP GBP
million million
======================================================= === === ======== ========
Income statement:
======================================================= === === ======== ========
Interest and similar income 236.7 233.4
================================================================== ======== ========
Interest and similar expense (49.4) (53.1)
================================================================== ======== ========
Net interest income 187.3 180.3
================================================================== ======== ========
Fee and commission income 48.2 52.3
================================================================== ======== ========
Fee and commission expense (18.0) (15.2)
================================================================== ======== ========
Net fee and commission income 30.2 37.1
================================================================== ======== ========
Other operating income 6.7 1.8
================================================================== ======== ========
Other income 36.9 38.9
================================================================== ======== ========
Total income 224.2 219.2
================================================================== ======== ========
Operating expenses:
======================================================= === === ======== ========
Other operating expenses (169.8) (152.8)
================================================================== ======== ========
Sabadell transaction costs (1.3) -
================================================================== ======== ========
Defined benefit pension scheme settlement gain - 63.7
================================================================== ======== ========
Total operating expenses (171.1) (89.1)
================================================================== ======== ========
Operating profit before impairment losses and taxation 53.1 130.1
================================================================== ======== ========
Impairment losses on loans and advances to customers (18.8) (27.3)
================================================================== ======== ========
Profit before taxation 34.3 102.8
================================================================== ======== ========
Taxation (7.4) (21.1)
================================================================== ======== ========
Profit for the year 26.9 81.7
================================================================== ======== ========
Other comprehensive income:
======================================================== === ======== ==========
Items that may be subsequently
reclassified to profit or loss:
======================================================== === ======== ==========
Movements in revaluation reserve
in respect of available-for-sale
financial assets 0.7 -
======================================================== === ======== ==========
Cash flow hedges 1.1 -
======================================================== === ======== ==========
Taxation (0.3) -
======================================================== === ======== ==========
Other comprehensive income for
the year, net of taxation 1.5 -
======================================================== === ======== ==========
Total comprehensive income for
the year 28.4 81.7
======================================================== === ======== ==========
Appendix 3:
Quarterly results summary by segment (unaudited)
Group
Q1 2015 Q4 2014 Q3 2014 Q2 2014 Q1 2014
GBP GBP GBP GBP GBP
million million million million million
================================================ ======== ======== ======== ======== ========
Net interest income 192.3 197.2 199.3 201.6 189.0
================================================ ======== ======== ======== ======== ========
Other income 30.5 34.5 33.2 34.5 38.1
================================================ ======== ======== ======== ======== ========
Total income 222.8 231.7 232.5 236.1 227.1
================================================ ======== ======== ======== ======== ========
Operating expenses (169.8) (194.7) (167.9) (180.7) (152.8)
================================================ ======== ======== ======== ======== ========
Impairment (18.8) (23.5) (23.0) (23.8) (27.3)
================================================ ======== ======== ======== ======== ========
Profit before taxation (management basis) 34.2 13.5 41.6 31.6 47.0
================================================ ======== ======== ======== ======== ========
Gain/(loss) on derivatives and hedge accounting 4.4 (0.4) (2.9) 0.8 (0.6)
================================================ ======== ======== ======== ======== ========
Derivative fair value unwind (3.0) (4.5) (5.6) (6.7) (7.3)
================================================ ======== ======== ======== ======== ========
Sabadell transaction costs (1.3) - - - -
================================================ ======== ======== ======== ======== ========
Defined benefit pension scheme settlement gain - - - - 63.7
================================================ ======== ======== ======== ======== ========
Statutory profit before taxation 34.3 8.6 33.1 25.7 102.8
================================================ ======== ======== ======== ======== ========
Loans and advances to customers 21,386.2 21,641.4 22,016.2 22,493.4 23,039.3
===================================== ======== ======== ======== ======== ========
Customer deposits 24,733.6 24,624.9 24,157.6 23,700.4 23,259.7
===================================== ======== ======== ======== ======== ========
Group banking net interest margin(1) 3.61% 3.57% 3.54% 3.54% 3.62%
===================================== ======== ======== ======== ======== ========
Management basis cost:income ratio 76.2% 84.0% 72.2% 76.5% 67.3%
===================================== ======== ======== ======== ======== ========
Group asset quality ratio(2) 0.35% 0.43% 0.41% 0.42% 0.52%
===================================== ======== ======== ======== ======== ========
Franchise
Q1 2015 Q4 2014 Q3 2014 Q2 2014 Q1 2014
GBP GBP GBP GBP GBP
million million million million million
================================================= ======== ======== ======== ======== ========
Net interest income 172.3 175.2 175.6 176.7 179.8
================================================= ======== ======== ======== ======== ========
Other income 33.1 37.3 36.0 36.0 38.5
================================================= ======== ======== ======== ======== ========
Total income 205.4 212.5 211.6 212.7 218.3
================================================= ======== ======== ======== ======== ========
Operating expenses (169.8) (194.7) (167.9) (180.7) (152.8)
================================================= ======== ======== ======== ======== ========
Impairment (18.8) (23.5) (23.0) (23.7) (26.8)
================================================= ======== ======== ======== ======== ========
Profit/(loss) before taxation (management basis) 16.8 (5.7) 20.7 8.3 38.7
================================================= ======== ======== ======== ======== ========
Loans and advances to customers 18,708.6 18,839.3 19,063.1 19,381.8 19,749.4
========================================= ======== ======== ======== ======== ========
Customer deposits 24,733.6 24,624.9 24,157.6 23,700.4 23,259.7
========================================= ======== ======== ======== ======== ========
Franchise banking net interest margin(1) 3.71% 3.65% 3.61% 3.60% 3.64%
========================================= ======== ======== ======== ======== ========
Mortgage Enhancement
Q1 2015 Q4 2014 Q3 2014 Q2 2014 Q1 2014
GBP GBP GBP GBP GBP
million million million million million
========================================== ======== ======== ======== ======== ========
Net interest income 20.0 22.0 23.7 24.9 9.2
========================================== ======== ======== ======== ======== ========
Other income (2.6) (2.8) (2.8) (1.5) (0.4)
========================================== ======== ======== ======== ======== ========
Total income 17.4 19.2 20.9 23.4 8.8
------------------------------------------ -------- -------- -------- -------- --------
Operating expenses - - - - -
========================================== ======== ======== ======== ======== ========
Impairment - - - (0.1) (0.5)
========================================== ======== ======== ======== ======== ========
Profit before taxation (management basis) 17.4 19.2 20.9 23.3 8.3
========================================== ======== ======== ======== ======== ========
Loans and advances to customers 2,677.6 2,802.1 2,953.1 3,111.6 3,289.9
---------------------------------------------------- ------- ------- ------- ------- -------
Mortgage Enhancement banking net interest margin(1) 2.96% 3.03% 3.10% 3.13% 3.25%
---------------------------------------------------- ------- ------- ------- ------- -------
(1) and (2) See notes on page 3.
Appendix 4:
Reconciliation of management basis to statutory results
(unaudited)
Defined
Gain/(loss) benefit
on derivatives Derivative pension
and fair Sabadell scheme
hedge value transaction settlement Statutory
Management accounting unwind costs gain results
3 months to 31 March basis GBP GBP GBP GBP GBP
2015 GBP million million million million million million
============================= ============ =============== ========== ============ =========== =========
Net interest income 192.3 (5.0) - - - 187.3
============================= ============ =============== ========== ============ =========== =========
Other income/(expense) 30.5 9.4 (3.0) - - 36.9
============================= ============ =============== ========== ============ =========== =========
Total income 222.8 4.4 (3.0) - - 224.2
============================= ============ =============== ========== ============ =========== =========
Operating expenses (169.8) - - (1.3) - (171.1)
============================= ============ =============== ========== ============ =========== =========
Impairment (18.8) - - - - (18.8)
============================= ============ =============== ========== ============ =========== =========
Profit/(loss) before
taxation 34.2 4.4 (3.0) (1.3) - 34.3
============================= ============ =============== ========== ============ =========== =========
Taxation (7.1) (0.9) 0.6 - - (7.4)
============================= ============ =============== ========== ============ =========== =========
Profit/(loss) after taxation 27.1 3.5 (2.4) (1.3) - 26.9
============================= ============ =============== ========== ============ =========== =========
3 months to 31 December 2014
============================== ======= ===== ===== =======
Net interest income 197.2 (6.2) - -- 191.0
============================== ======= ===== ===== =======
Other income/(expense) 34.5 5.8 (4.5) -- 35.8
============================== ======= ===== ===== =======
Total income 231.7 (0.4) (4.5) -- 226.8
============================== ======= ===== ===== =======
Operating expenses (194.7) - - --(194.7)
============================== ======= ===== ===== =======
Impairment (23.5) - - -- (23.5)
============================== ======= ===== ===== =======
Profit/(loss) before taxation 13.5 (0.4) (4.5) -- 8.6
============================== ======= ===== ===== =======
Taxation (2.9) 0.1 1.0 -- (1.8)
============================== ======= ===== ===== =======
Profit/(loss) after taxation 10.6 (0.3) (3.5) -- 6.8
============================== ======= ===== ===== =======
3 months to 31 March 2014
============================== ======= ===== ===== ====== ======
Net interest income 189.0 (8.7) - - - 180.3
============================== ======= ===== ===== ====== ======
Other income/(expense) 38.1 8.1 (7.3) - - 38.9
============================== ======= ===== ===== ====== ======
Total income 227.1 (0.6) (7.3) - - 219.2
============================== ======= ===== ===== ====== ======
Operating expenses (152.8) - - - 63.7 (89.1)
============================== ======= ===== ===== ====== ======
Impairment (27.3) - - - - (27.3)
============================== ======= ===== ===== ====== ======
Profit/(loss) before taxation 47.0 (0.6) (7.3) - 63.7 102.8
============================== ======= ===== ===== ====== ======
Taxation (9.8) 0.1 1.6 -(13.0) (21.1)
============================== ======= ===== ===== ====== ======
Profit/(loss) after taxation 37.2 (0.5) (5.7) - 50.7 81.7
============================== ======= ===== ===== ====== ======
Contacts
For further information please contact:
Investors and analysts
Martin Adams
Head of Investor Relations
Phone: +44 (0)207 003 9419
Email: martin.adams@tsb.co.uk
Media
Charlotte Sjoberg
Head of Media Relations
Phone: +44 (0)207 003 9281
Email: charlotte.sjoberg@tsb.co.uk
Clinton Manning
Partner
Bell Pottinger (Financial PR advisor to TSB)
Phone: +44 (0)7711 972 662
Email: Cmanning@bellpottinger.com
This information is provided by RNS
The company news service from the London Stock Exchange
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