Mortgage balances at the bank have grown to £3bn, and now make up 26% of Tesco’s lending portfolio, up from 22% last year, helping to boost the bank’s income for the year.
The bank did not publish its gross lending total for the year, however in October it revealed it had completed £2.5bn of lending in its first full year operating in the broker market.
Tesco Bank’s operating profits before exceptional items increased by 10% year-on-year to £173m.
Overall loans and advances to customers reached £11.5bn, up by 15.7%, and the lender said its balance sheet is well positioned to support further growth.
Tesco Bank reported a rise in customer numbers to 5.6m customers, growth of around 4%, as deposits grew to £9.2bn.
However, underlying impairment charges increased by around 30% to £136.5m, which the bank said reflected balance growth and the implementation of a number of credit initiatives in recent years.
The wider Tesco group today posted a 28% rise in profits to more than £1bn.
Laith Khalaf, senior analyst at Hargreaves Lansdown, said: “Tesco Bank has been helped by customer redress costs falling out of the equation which has led to a big jump in its reported profits.
“There’s some headwinds too though, with ATM income falling back as fewer people are using cash, and an increase in loan impairment charges.
“All in all things heading in the right direction, but it’s a relatively minor part in the Tesco group as a whole.”