LONDON (Reuters) - Britain's TSB Bank expects to pay more in fees to Lloyds Banking Group (L:LLOY) for using its former owner's banking platform, as it posted a profit fall in 2017 as a result of the payments.
Since it was taken over by Spain's Banco Sabadell (MC:SABE) in 2015, TSB has been using Lloyds' IT infrastructure, at a cost of hundreds of millions of pounds each year.
TSB said on Friday its operating costs rose by 16.7 percent to 821 million pounds in 2017 while its profit before tax fell to 162.7 million pounds, primarily due to a 122 million pound increase in the fees payable to Lloyds.
The fall in the bank's profit was also as a result of a non-recurring gain from the sale of its interest in Visa Europe, worth 32.5 million pounds, in the previous year.
TSB said it will finally migrate off the Lloyds platform and onto a newly-built one this year, but until the roll-out is complete, it remains tied into fee increases.
The bank also named a new chairman, with former Standard Chartered (LON:STAN) banker Richard Meddings, a non-executive director at TSB, succeeding Will Samuel with immediate effect.