TSB plans dividend for owner after IT failure fine damages parent’s quarterly profits
TSB says it is planning to pay its owner an annual dividend for the first time, offsetting the fine of almost £50m it received last month for its infamous IT meltdown in 2018.
Banco Sabadell said on Thursday that the £48.7m penalty imposed on TSB by UK regulators had pushed its UK unit to a quarterly loss between October and December – damaging the group’s profitability in the final quarter of the year.
Sabadell reported a 7.5% decline in fourth quarter net profits despite the boost for the sector as a whole from rising interest rates.
TSB, it said, fell to a €6m (£5.3m) loss over the three months – driven by the impact of the fine imposed by the Financial Conduct Authority and Bank of England’s Prudential Regulation Authority over the historic PR disaster that blocked millions of customers from their accounts for up to several weeks when an IT migration went wrong.
TSB released figures covering the 2022 year as a whole.
They showed that, despite the fine, it managed to achieve record statutory profit before tax of £183.5m.
That represented a rise of 16.5% on 2021.
As a result, it proposed paying a £50m dividend to Sabadell.
TSB said its bottom line performance was aided by cost-cutting.
It took a charge of £54.9m to guard against the prospect of bad loans in the tough economy and forecast that house prices could fall by up to 10% this year in a worst case scenario.
On the sour loan issue, TSB admitted it was “yet to see this translate to a marked increase in customers experiencing financial difficulties or missing payments”.
Robin Bulloch, TSB’s chief executive, said: “In challenging and unpredictable economic circumstances, TSB continues to be a relevant, purpose-driven brand offering the banking products and services our customers need most.
“With a relentless focus on improving our service, and more satisfied customers, we have delivered a strong set of results for 2022
“This includes balance sheet growth, reduced underlying costs, and improved overall profitability. And, for the first time, TSB will pay a dividend to our parent company, Sabadell.”
