Record mortgage lending helps TSB swing back to profit

High street bank TSB has revealed it returned to profit in 2021 thanks to record mortgage lending and a bounceback in the wider economy.

The Spanish-owned lender posted annual pre-tax profits of £157.5 million against losses of £204.6 million in 2020.

It comes after TSB notched up its highest-ever gross mortgage lending at £9.2 billion for the year, up 46% on a year earlier.

The bank’s results were also boosted as cash set aside for bad loans plunged to just £100,000, down from £164 million in 2020 at the height of the pandemic.

TSB’s results come less than two months after it announced the closure of 70 bank branches across the UK, taking its network down from 290 to 220 by the end of June 2022.

The figures also follow a failed attempt in October by rival Co-operative Bank to buy TSB from owner Banco de Sabadell.

Sabadell rejected the unsolicited offer.

TSB’s full-year results were boosted by surging demand for mortgages amid a buoyant housing market thanks to rock-bottom interest rates, the Government’s stamp duty holiday, and changing home-buyer demands due to the pandemic.

A recovering UK economy is also helping to drive bank profits, with losses for loans turned sour far lower than the sector expected.

TSB’s interim chief executive, Robin Bulloch, welcomed a “great set of results”.

“We have seen outstanding income growth in 2021, made improvements in the products and services we offer customers, and become a more efficient and resilient bank,” he said.

Mr Bulloch took over on an interim basis last month after former boss Debbie Crosbie was hired to the top job at Nationwide.

TSB said its total customer lending jumped 12.2% to £37.4 million last year.

But it saw a slowdown in customer deposits growth – up 4.6% to £36 billion – as customers spent some of the savings built up in the early stages of the pandemic.