The income increase of 11% to £584.5m is mainly attributed to the higher interest rate environment, somewhat offset by lower mortgage margins due to a competitive market. These results marked the highest pre-tax profit since TSB’s relaunch in 2013 following a merger with Lloyds Banking Group in the 1990s and subsequent acquisition by Sabadell Group in 2015.

Robin Bulloch, TSB’s CEO, said: “These results reflect the strong progress we’ve made to deliver both a better service and more value to TSB customers. We’ve made it easier than ever before for our customers to talk to our highly skilled experts in branches, over the phone and through video banking, as well as improving services through our digital channels.”

“At a time when many of our customers are having to manage rising costs, our Money Confidence purpose couldn’t be more relevant. I’m proud that TSB continues to be there to support our customers, and I want to thank colleagues for going above and beyond to look after them.”

Despite these positive results, TSB noted a 54.7% increase in credit impairment charges to £27.7m, reflecting an uncertain economic outlook and mounting inflationary pressures. While customer defaults have risen, they remain within expectations and below historical levels. This rise in impairment charges coincides with an industry-wide trend, with Barclays recently setting aside an impairment charge of £900m to cover expected loan losses.

TSB’s half-year results also highlighted a contraction in loans and advances to customers, decreasing by 3.1% year on year to £36.7 billion. This reflects lower customer demand in a rising interest rate environment and competitive mortgage market. Meanwhile, customer deposits rose slightly to £35.4bn, driven by competitively priced savings products.

The bank’s balance sheet remains resilient, maintaining a common equity tier 1 ratio of 17.3% and liquidity coverage ratio of 177.4%. In the wake of a strong 2022 performance, TSB paid its first dividend to its parent company, Sabadell.