Tsb Banking Grp Net Income dropped on 153% while Revenue increased on 10.0%

01 Feb 2019 • About Tsb Banking Grp ($TSB) • By InTwits

Tsb Banking Grp reported 2018 financial results today. Here are the key drivers of the company's long term financial model:

Tsb Banking Grp is a growth stock: 2018 revenue growth was 10.0%, 5 year revenue CAGR was 12.2% at 2018 ROIC -1.3%
Tsb Banking Grp has low CAPEX intensity: 5 year average CAPEX/Revenue was 3.1%. At the same time it's in pair with industry average of 2.8%
CAPEX is quite volatile: £16m in 2018, £16m in 2017, £36m in 2016, £40m in 2015, £86m in 2014
The company has unprofitable business model: ROIC is -1.3%

Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.

Revenue and profitability

Tsb Banking Grp's Revenue increased on 10.0%.

Net Income margin dropped on 12.7 pp from 8.6% to -4.1% in 2018.

Investments (CAPEX, working capital and M&A)

In 2018 Tsb Banking Grp had CAPEX/Revenue of 1.0%. Tsb Banking Grp showed decline in CAPEX/Revenue of 2.3 pp from 3.4% in 2015 to 1.0% in 2018. It's average CAPEX/Revenue for the last three years was 1.6%. CAPEX as a % of Revenue stuck to a declining trend at -1.5 pp per annum in the last 5 years.

Return on investment

The company operates at negative ROIC (-1.3%) and ROE (-3.3%). ROIC decreased on 4.4 pp from 3.1% to -1.3% in 2018. ROE decreased on 9.4 pp from 6.1% to -3.3% in 2018.

Leverage (Debt)

Debt jumped on 14.1% while cash decreased on 5.8%.

The company has no short term refinancing risk: short term debt is zero.

Financial and operational results

FY ended 31 Dec 2018

Tsb Banking Grp ($TSB) key annual financial indicators

mln. £	2014	2015	2016	2017	2018	2018/2017
P&L
Revenue	1,192	1,174	1,345	1,385	1,523	10.0%
Net Income	135	89	128	119	-63	-153.1%
Balance Sheet
Cash	4,532	2,919	3,912	7,581	7,138	-5.8%
Short Term Debt	33	1	50	0	0
Long Term Debt	406	402	413	6,031	6,880	14.1%
Cash flow
Capex	86	40	36	16	16	0.0%
Ratios
Revenue growth	39.2%	-1.4%	14.5%	2.9%	10.0%

Net Income Margin	11.3%	7.6%	9.5%	8.6%	-4.1%	-12.7%
CAPEX, % of revenue	7.2%	3.4%	2.7%	1.1%	1.0%	-0.1%

ROIC	9.6%	3.3%	8.3%	3.1%	-1.3%	-4.4%
ROE	9.1%	5.3%	7.1%	6.1%	-3.3%	-9.4%

Peers in Banks

Below you can find Tsb Banking Grp benchmarking vs. other companies in Banks industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.

Top companies by Revenue growth, %


Top 5	FY2014	FY2015	FY2016	FY2017	FY2018
European Islamic Investment Bank ($EIIB)	42.3%	-4.1%	-63.9%	232.5%
Halyk Savings Bank Of Kazakhstn JSC ($HSBK)	16.3%	19.5%	16.4%	59.5%
Zenith Bank ($ZENB)		6.8%	17.9%	46.7%
Commercial Intl Bank(Egypt)S.A.E ($CBKD)	18.9%	26.8%	27.0%	46.4%
TCS Group Holding ($TCS)	11.5%	10.6%	34.0%	33.7%
Median (43 companies)	13.6%	4.0%	3.4%	4.5%	12.2%
Tsb Banking Grp ($TSB)		-1.4%	14.5%	2.9%	10.0%

Top companies by CAPEX/Revenue, %


Top 5	FY2014	FY2015	FY2016	FY2017	FY2018
Lloyds Banking Group ($LLPC)	13.1%	13.6%	14.5%	14.5%
Banco Santander Sa ($BNC)	8.9%	10.2%	9.1%	10.0%	14.7%
Bcb Hldgs Ltd ($BCBW)	5.4%	2.5%	3.0%	7.3%	5.9%
Royal Bank Of Scotland Group ($RBS)	4.1%	4.6%	5.6%	7.1%
Diamond Bank ($DBPA)	6.0%	6.7%	6.2%	7.0%
Median (39 companies)	2.0%	2.5%	2.0%	1.9%	1.5%
Tsb Banking Grp ($TSB)	7.2%	3.4%	2.7%	1.1%	1.0%

Top companies by ROIC, %


Top 5	FY2014	FY2015	FY2016	FY2017	FY2018
TCS Group Holding ($TCS)	6.7%	3.4%	22.5%	31.8%
Commercial Intl Bank(Egypt)S.A.E ($CBKD)	30.1%	30.3%	28.0%	25.3%
Guaranty Trust Bank ($GRTB)	17.8%	16.0%	17.4%	18.3%
Sberbank Of Russia ($SBER)	4.8%	4.0%	9.4%	13.0%
Zenith Bank ($ZENB)	15.0%	11.2%	11.1%	11.4%
Median (43 companies)	4.4%	3.5%	4.5%	4.6%	4.5%
Tsb Banking Grp ($TSB)	9.6%	3.3%	8.3%	3.1%	-1.3%

Tsb Banking Grp stock price chart

Tsb Banking Grp financials

mln.	FY2011	FY2012	FY2013

Revenue	1,336	1,293	856.2
EBITDA	0.000	0.000	0.000
Net income	57.000	28.000	185.0
CAPEX	18.000	23.000	37.500
Debt	0.000	0.000	234.7
Cash	390.0	361.0	316.4

About Tsb Banking Grp

TSB Banking Group plc, together with its subsidiaries, provides retail banking services to retail and small business banking customers in the United Kingdom. It operates through two segments, TSB Franchise and Mortgage Enhancement. The company accepts current accounts, savings accounts, business accounts, designated clients' accounts, clients' call accounts, treasurer's accounts, and credit union accounts; and offers various loans and finance products, such as small business and commercial loans, personal loans, graduate loans, business overdrafts, commercial mortgages, and enterprise finance guarantees, as well as residential buy to let mortgage, fixed rate and tracker mortgage, and remortgaging services. It also provides business debit and credit cards; online, bulk, and international payment services; and home, travel, and mobile phone insurance services, as well as Internet banking and travel services. In addition, the company owns a portfolio of mortgage assets. As of March 31, 2014, it operates 631 branches in England, Scotland, and Wales. The company was incorporated in 2014 and is headquartered in Edinburgh, the United Kingdom. TSB Banking Group plc is a subsidiary of Lloyds Banking Group plc.