According to the latest financial results from TSB, the main driver was high income, which rose by £50.5m to £1.16bn “reflecting the impact of higher interest rate environment” and was “partially offset by lower mortgage margins in a highly competitive market”.
Total balance sheet mortgage lending came to around £34bn in 2023, slightly down from £35.7bn last year.
Total customer lending, which includes unsecured retail lending and business banking, fell by around £1.8bn year-on-year to £36.2bn in 2023, which it said mirrored the “slowdown in the mortgage market”.
The lender added that applications in the wider mortgage market were around 27 per cent lower than the previous year.
TSB said that the company had helped 7,800 first-time buyers get onto the property ladder and had proactively contacted 190,000 customers that it considered at “heightened risk of falling into financial difficulty to offer assistance and support”.
It added that it had quickly put the Mortgage Charter in place and “led the way” in implementing similar support to buy-to-let customers.
The company said that its credit impairment charges rose by nearly a quarter year-on-year to £68.3m “reflecting the uncertain economic outlook, the higher interest rate environment and increasing inflationary pressures on our customers”.
Within that, the firm said that around £4m was related to mortgages, which is nearly three quarters lower compared to the same period last year.
TSB says ‘positive signs of recovery’ in mortgage market
TSB said that the UK economy “performed better than expected in 2023” and “narrowly avoided a recession and house prices were broadly flat”.
It added that inflation fell sharply, stopping a decline in wages but was “significantly higher” than the two per cent inflation target set by the Bank of England.
TSB said that it was widely though that the base rate had peaked at 5.25 per cent, which is in line with the Bank of England keeping the base rate stable at 5.25 per cent for the fourth time.
“Forward rates imply there will be rate cuts this year, though the cost of borrowing will rise for many households in 2024, as they refinance expiring fixed-rate mortgages. The mortgage market was very weak in 2023, but we’re seeing positive signs of recovery in the new year as mortgage application volumes are increasing,” it said.
However, it said that the outlook is uncertain, with a possibility being that unemployment was rise more steeply than expected.
“TSB is well placed to support its customers against this economic backdrop. The business has a robust capital and liquidity position, and a strong focus on serving its customers and delivering its ever more relevant money confidence purpose,” it said.
Robin Bulloch, TSB’s CEO, said: “We are reporting another year of sustained profitability, demonstrating the impact of both our continued focus on customers, delivering products and services that genuinely meet their needs, and the work to make TSB a simpler, more efficient, and resilient bank.
“Throughout the cost of living challenges, our money confidence purpose has resonated strongly with our customers – and I’d like to thank everyone at TSB for their continued hard work to step up to support them.”
