Customers cancelled appointments to arrange mortgages in a knee-jerk reaction to the vote for Brexit, the chief executive of TSB said on Thursday, as the bank reported a sharp rise in profits for the first half of the year.
Paul Pester, chief executive of the Spanish-owned bank, said that after an initial dip, mortgage activity resumed a few days after the referendum result. He said that customer behaviour had altered more when England were playing during the Euro 2016 football tournament.
“We saw some people for a few days cancel some mortgage appointments,” said Pester. The referendum result was announced on Friday 24 June and “by the Tuesday it was coming back to normal”.
The self-styled challenger bank was created in 2013 when Lloyds Banking Group spun out 600 branches to meet a demand from the EU imposed in relation to its 2008 taxpayer bailout. TSB was floated on the stock market before being bought last year by the Spanish bank Sabadell.
Pester has urged the Competition and Markets Authority – whose final report on competition in banking is due by 12 August – to adopt proposals that would make it easier for customers to know how much they were paying for a bank account. He said he was concerned that Brexit could distract from attempts to boost competition on the high street at a time when the number of customers switching accounts across they industry had fallen 10%.
“What I’m nervous about is that the uncertainty created by the Brexit vote will refocus policymakers on negotiating the exit and will take their eye off the ball in the reform of banking,” said Pester.
He had exceeded his goal to attract 6% of all current accounts switchers, taking a 7% share in the first six months of the year. Profits in the first half rose 440% to £125m, bolstered by the acquisition last year of £3.3bn of mortgages from Northern Rock.
But Pester said the pace of profit growth was likely to slow down. He pointed to the impact of continued low interest rates and a rising bill for the use of Lloyds’ IT systems, which would have “a bearing on the financial performance in future periods”.
The share prices of other banks attempting to challenge the “big four” – Lloyds, Royal Bank of Scotland, HSBC and Barclays – have been battered since the Brexit vote. Pester said, however, that TSB should be insulated from any concerns as its mortgage book had a loan-to-value ratio of 42% (meaning the size of a loan compared to the value of a property).
