More costs relating to TSB’s huge IT failure earlier this year hit its Spanish owner Sabadell’s earnings in the third quarter, but the company still managed to beat forecasts.
Sabadell reported that net profit was down 37 per cent in the period after a botched migration of TSB’s systems in April led to a regulatory investigation and, ultimately, the early departure of its chief executive.
The Spanish bank reported net attributable profit for the quarter of €127m (£113m), against analyst forecasts of €123m, lifting its shares by 4.9 per cent.
Sabadell said the extraordinary costs relating to the TSB outage included an increase in interest rates on its premium account, impacted commissions and fraud losses.
The latest TSB charge of €88m relating to the IT outage comes on top of an extraordinary charge of €203m taken by Sabadell in the second quarter.
Sabadell also said it expected a final net one-off charge of €30m in the fourth quarter, taking the total costs related to the TSB IT migration to €321m.
The bank’s handling of the crisis tarnished its reputation just as it tried to win more market share in Britain and offset a squeeze in margins in its Spanish home market as a result of ultra low interest rates in the Eurozone.
Up to 1.9 million customers were locked out of their accounts in April while some reported that they could see other people’s details and could not make payments.
Former TSB boss Paul Pester finally stepped down last month following sustained pressure over his handling of the technical problems.
Figures released this week showed more than 20,000 customers left TSB in the wake of the meltdown.
However, analysts said on Friday that Sabadell had more than made up for the failures at TSB, and predicted that the bank could be on the way to recovering.
“The punishment that the company has suffered for the problems at TSB has been excessive and these results should allay doubts about the share price and may even lead to a recovery,” said Renta4 bank analyst Nuria Alvarez.
Additional reporting by newswires
