TSB's deposits from personal customers have been dominated by old- fashioned types of account that pay customers well, without offering modern facilities. This makes money, but is dangerous: customers cotton on quickly when there are better deals elsewhere; and depositors with old-fashioned savings accounts are less likely to buy insurance.
Following the switch, pounds 6bn of TSB's pounds 8bn of retail deposits is in the less profitable higher-interest accounts, half of which is new money switched into the bank.
This is one reason for lower retail banking profit in the latest half-year, down pounds 25m to pounds 118m compared with a year ago. Insurance profits rose pounds 39m over the same period to pounds 88m, helped by successful selling to banking customers, so the two businesses together made pounds 14m more than a year earlier, at pounds 206m.
The bank's medium-term strategy of concentrating on retail banking and insurance may hang together, but there is less certainty over the next six months, which explains why the interim dividend is unchanged at 3.15p, with any decision on an increase left for the second half.
With heavy bad debts, group profit before tax was only pounds 3m higher than a year earlier, at pounds 80m, though that was a lot better than the losses in the second half of last year.
Sir Nicholas is only lugubriously cheerful about bad debts, down pounds 227m on the immediately preceding half but pounds 40m above a year ago. He says the full year should show a significant decline in provisions.
Hill Samuel, still for sale at the right price, made pounds 36m against pounds 15m a year ago, after hiving off its bad debts into a loan administration unit.
The recovery may not be coming through as fast as was hoped. But TSB is going through an effective reorganisation while investors should never forget the bid possibilities. The shares fell 3.5p to 194p.