By Aashika Jain
(Reuters) - TSB Banking Group Plc (L:TSB), which agreed to a $2.5 billion (2 billion pound) takeover by Spain's Sabadell (MC:SABE) last month, said first-quarter profit more than doubled from the previous three months thanks to increased lending and a bigger share of the current accounts market.
TSB, Britain's seventh biggest lender after being hived off from Lloyds Banking Group (L:LLOY) last June, said its share of new and switched bank accounts rose to 7.9 percent in the first quarter, above its target of 6 percent.
Spain's Sabadell is aiming to grow TSB into a potent challenger to Britain's biggest banks, also pitting it against domestic rival Santander (MC:SAN), which already has a strong presence in Britain.
TSB group profit before tax jumped 153 percent to 34.2 million pounds for the three months ended March 31 from the fourth quarter of last year.
On a year-on-year basis, group pretax profit decreased by 27 percent because of higher costs.
Sustained low interest rate and a competitive environment continued to remain challenges, which the bank said it would mitigate via cost cutting.
TSB received over 700 million pounds of gross mortgage applications through its newly launched TSB mortgage broker service by the end of the quarter.
New lending for the bank jumped 50 percent to nearly 500 million pounds compared to a year earlier.
Chief Executive Paul Pester said net lending was expected to grow by over 1.5 billion in 2015. "We continue to expect 2015 to be the year which will turn the corner on our franchise lending," Pester told reporters.
"Were TSB to continue to develop on a standalone basis, we would envisage an extended period of low-risk, mortgage-led growth, eminently capable of delivering a return of equity greater than 10 percent by 2019 estimates..," Investec analyst Ian Gordon said in a note.
Shares in TSB were marginally up at 335.6 pence at 0950 GMT. They have risen 2.6 percent since Sabadell takeover offer.