Mortgage News
Tesco Bank profits up 5.6%
Tesco is targeting further growth in its banking business, which helped the retailer report record profits of £3.8bn for the year to the end of February.
The retail giant’s latest annual results show Tesco Bank’s trading profit in 2010/11 rose 5.6% to £264m compared to the previous year. Revenues also increased by 6.9% to £919m.
It highlighted savings, loans, credit cards and car insurance as strong growth areas and in particular singled out its Fixed Rate Saver product, which ended the year with a balance of £397m, 40% higher than planned.
Overall, Tesco reported profits were up 12.3% to £3.8bn from sales of £67.6bn, although the company has admitted improvements are needed in its UK operations, with the bulk of profits coming from Asia.
Tesco also confirmed its forthcoming entrance into the mortgage market and said its latest results leave it in a healthy position for the launch.
It says: “The strong growth in the Bank’s deposit base means that we have a significant excess of deposits over loans, as we build out balance sheet capacity ahead of the planned launch of mortgages.”
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The company is targeting further growth in its banking business, adding “we will deliver on the potential of Retailing Services – of which the Bank is a big part”.
Over the course of the year, Tesco Bank continued its separation from RBS and built up its Core Tier 1 capital ratio to 15.9%.