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IT meltdown cost TSB £330m, full year results show

TSB’s statutory loss before tax for 2018 was £105.4m, against a profit of £162.7m in 2017, reflecting the impact of the issues following the bank’s disastrous IT migration.

In total, TSB recognised post-migration costs, including customer compensation, additional resources, fraud and foregone income of £330.2m, partially offset by the provisional recovery of £153m from its IT provider, Sabis.

 

The problems left customers unable to access their accounts or make payments, while others were shown incorrect information, and in some cases the details of other people’s accounts.

 

The issues stemmed from when TSB split from Lloyds Banking Group. It continued to rent a banking platform from Lloyds while it constructed its own, Proteo4UK.

 

That system was intended to go live over the weekend of April 21 and 22 last year as it moved its customers’ data from the old platform to its new one.

 

The problems persisted for months and in September chief executive Paul Pester stepped down over the issues. In November, Debbie Crosbie was announced as CEO-designate and she will join TSB business in the spring.

 

Around 80,000 customers switched their bank account away from TSB in 2018 with volumes peaking in Q2; compared with around 50,000 customers switching their account away from TSB in 2017.

 

However, around 140,000 customers opened a new bank account or switched their account to TSB in 2018.

 

At 31 December 2018, TSB’s total customer lending was down 2.7 percent to £30bn from £30.8bn. Total customer deposits stood at £29.1bn.

 

At 31 December 2018, total forborne loans were £310.3m, down from £363.1m in 2017, of which £182.4m (2017: £59.2m) were impaired. At 31 December 2018, the allowance for loan losses held in respect of forborne loans was £27.4m, up from £13.2m the year before.

 

TSB now has 3.8 million current account customers and over five million customers in total.

 

TSB executive chairman Richard Meddings said: “In addition to continuing to improve our offer for consumers, we are going to make a significant move into business banking. We have a multi-million-pound investment programme underway to help us grow our business banking offer across every town and city we serve.

 

“Whilst the migration caused considerable difficulties, we’re now a stronger bank, operating on a more coherent and modern platform, and able to service more customers than ever before.”

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