By Kristy Dorsey

TSB has joined the banking fraternity in reporting a surge in provisions to cover bad debts which pushed the UK high street lender into a loss for the first half of this year.

Owned by Spain’s Sabadell, TSB racked up a £65.5 million pre-tax loss after increasing credit impairment charges by £87.5m to a total of £111m across the first six months. It blamed the sizable increase on the “significant weakening” in the economic outlook since the first quarter of this year, including higher forecast unemployment and declines in house prices.

The plunge into the red compares to a profit of £21.1m for the same period a year earlier. Glasgow-born chief executive Debbie Crosbie, the former chief operating officer of Clydesdale Bank owner CYBG, said she was pleased with TSB’s performance against the extremely challenging backdrop of the Covid-19 pandemic.

“Right now we are living through a unique crisis,” she said. “TSB has been around for a long time, but we have never experienced anything like this.”

Ms Crosbie highlighted a five-fold increase in SME loans during the period, amounting to £400m across more than 15,000 firms through the Government’s bounce back scheme.

Total customer lending was marginally higher at £31.1 billion, with growth in business and mortgage lending offset by lower unsecured balances as consumers put a halt on spending and in some cases paid down credit card balances. Customer deposits rose by 9 per cent to £32.9bn, again reflecting lower levels of consumer spending.

Ms Crosbie said the bank was on course with its digital strategy, which in some respects has been accelerated by the pandemic. The proportion of transactions processed by TSB through digital or automated channels rose to more than 90% in June.

TSB has been on a drive to improve its IT systems after an online meltdown in 2018 locked millions of customers out of their accounts.

“We’ve benefitted hugely from the technology platform we now have in place at TSB, enabling us to accelerate our digital offer for customers when they needed us most,” she said.