TSB is outstripping its own expectations of growth as the lender, informally recognised as the most worthy challenger to Britainís banking giants, announced it is responsible for 1 in 10 new current accounts opened in the third quarter, amid plans to roll out 30 more branches in the next couple of years.
Having split from Lloyds last year, TSB has acquired custom at an exponentially growing quarterly rate, with Q3 figures revealing a 0.5% increase in the speed at which it is opening new current accounts. However, the chief executive has conceded that TSBís goal for 6% of the market is more long-term; its current market share standing of 4.2%.
Paul Pester said: ìIt takes a long time for that share of flow to turn into share of stock. Even if you take 10% of flow, itís a glacial level of change.î
Nevertheless, the revived strength of TSBís performance led to its pre-tax profits soaring by 28.8% to £33.1m, a surge which translated in a 1.5% increase in the uptake of shares in the burgeoning bank. However, this is still 14% lower than the same period a year ago, reflecting the distance TSB has to go before it can reach the fruitfulness of pastures previously grazed on.
Moreover, TSBís customer deposits grew by £500m to £24.2bn over Q3, despite its own admission that it is not one of the big winners of the governmentís current account switching scheme.
"While we have always been clear that we are on a five-year journey to grow TSB and its returns, it's great to see people right across Britain continuing to vote with their feet for TSB's local banking model," said chief executive Paul Pester.
"Nearly one in 10 of all customers who opened new bank accounts or switched during the last quarter chose TSB - this is well ahead of our long-term target and is testament to the great service our TSB partners continue to deliver."
TSB pride themselves on a consumer-orientated approach and stand out as the most likely contenders to the ëbig fourí lenders, in an age where these banking mammoths have sullied their own reputations through a number of scandals and the unshakeable stigma still attached from the financial crisis.
To aid TSB on said quest, Mr Pester urged policymakers to enhance competition within the banking sector, most notably through the levelling of the playing field as far as the provision of up-date technology systems across the board.
TSB was cast away by Lloyds Banking Group as a stipulation of the latterís taxpayer bailout in the wake of the financial crisis, and few believed it wouldíve proved such a worthy competitor given the unceremonious nature of the split.
However, Mr Pester has overseen the appointment of a new digital services officer, an innovative role within a bank, who has already presided over the synthesis of TSBís new website just over a month ago. Moreover, TSBís decision to roll out 30 more branches across the UK bucks the recent trend which has seen banks closing high street branches across the UK in a digital-orientated move. This two-pronged approach is one of the many innovative measures undertaken by Mr Pester, who is committed to ìfuelling local economic growthî, a perspective highlighted by their pledge that customers will be able to phone their local branch directly.
However, Mr Pester conceded that TSBís ìmortgage book is shrinkingî, suggesting that TSB will lose mortgagees in the early parts of 2015 before acquiring them at a faster rate as the year develops. Due to its inferior loan to deposit ratio and exorbitant costs, financial critics have put their heads together declaring TSB needs to address its mortgage book if it seeks to compete with the big four.
TSBís announced a drop in gross mortgage lending for Q3 by £300m, and has announced its intention to go start an affiliation with the principal broker networks in the UK to boost its custom.
However, their fairly attractive, latest current account offering ñ ëPlus Accountí ñ pays a healthy 5% on balances up to £2000, and more appealing yet, necessitates a min monthly deposit of a mere £500.
Mr Pester suggested the future looks rosy for TSB: ìIf the right assets come at the right price we will look at them, to help us to accelerate growth. We have lots of capital, lots of funding, so we are well placed to acquire assets.î