Tesco Bank's mortgage plans boosted by rise in profits
Tesco Bank has reported strong growth in its annual figures, as it prepares to move into the mortgage market.
The Edinburgh-based subsidiary of Britain's biggest retailer reported revenue up 7% to £919m, with its trading profit up 5.6%. As part of Tesco's wider results, the bank said it grew business in credit cards by 11%, personal loans by 17% and motor insurance by 8%. Having launched a fixed rate saver product last autumn, Tesco Bank said that has substantially outperformed expectations. The bank also said its bad debt provisions were down by a substantial 26%, as credit cards and loan defaults reduced. This was despite the increase in lending. Some of this was used to offset the unexpected high cost of injury claims in the motor insurance business, which it says is affecting the whole industry. Tesco Bank's core capital ratio reached nearly 15.9% by the end of the financial year. "The strong growth in the bank's deposit base means that we have a significant excess of deposits over loans as we build out balance sheet capacity ahead of the planned launch of mortgages," the company commented on its interim financial results.