Around one third of TSB Banking (TSB) was floated by Lloyds Banking (LLOY) as recently as June last year, and the newcomer has certainly hit the ground running. And while comparative figures offer little to gauge performance, it is clear that TSB - free of the legacy issues bedevilling its larger rivals - is taking an increasing share of the market, with nearly half a million new accounts opened with the bank last year.
Headline pre-tax profit of £170m was well ahead of consensus estimates, while the franchise net interest margin was also above estimates at 3.62 per cent. However, the bank expects to see some margin compression later this year as a result of competition for new loans and the lower interest rate environment. However, there is clearly plenty of room to expand the loan book - already up nearly 8 per cent - with the loan-to-deposit ratio falling to 76.5 per cent from 87 per cent. The bank is also very well capitalised, and its core tier-one capital ratio of nearly 20 per cent makes it one of the strongest capitalised banks in the UK.
Analysts at Investec Securities are forecasting operating income of £905m for the coming year (from £927m in 2014).
