TSB said lower mortgage margins in “challenging market conditions”, as well as a £126m increase in the interest paid to savers, resulted in its drop in profit. 

Compared to the preceding H2 2023 period, TSB’s profit was 25% higher. 

Its net interest margin (NIM) contracted by 0.22% year-on-year to 2.62% in the first half of the year. However, this was only 0.05% lower than the 2.57% NIM the bank had in the latter half of 2023. 

TSB said the main reason for its profit fall was a decline in income generated during the period. This fell by £35.8m or 6.1% annually to an income of £548.7m in H1. 

The bank did not disclose its mortgage lending figures for the period but reported that its mortgage book grew by £400m to £33.7bn. 

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It served nearly 4,000 homebuyers during the period, with first-time buyers accounting for 55% of completions. The value of mortgage applications rose by 22%, while completions were 28% or £900m higher than last year. 

The bank’s total loans and advances to customers in H1 were 0.3% down annually at £36.6bn, and 1.1% higher than the end of 2023. 

 

A better outlook for 2024

TSB said that with inflation returning to “more normal levels”, it expected interest rates to follow suit. However, it said it was likely that rates would remain higher than they were in the years before rates started to increase. 

Its credit impairment charges fell by 31% to £19.1m in H1, which TSB said reflected the “more favourable economic outlook”. 

Robin Bulloch, chief executive of TSB, said: “Our focus in 2024 is making TSB simpler and easier to bank with and I’m delighted to see more customers choosing TSB. 

“We continue to make good progress against our strategy, and I’d like to thank everyone at TSB for their continued efforts to support our customers and communities, helping them feel more money confident.”