Most impressive is the way the mess left over from the 1980s is being dealt with. Both Hill Samuel's ragbag of property bad debts and the bank's Mortgage Express subsidiary - back in profit - have responded to treatment.
In Hill Samuel's case the problem loans are now in a loan administration unit. This has freed the merchant banking management to concentrate on repositioning the business, which is just as well since no one offered a decent price when it was touted around for sale.
TSB is also well placed to expand its business, with a healthy retail insurance operation and a good quality mortgage book.
In a low interest rate world all the clearing banks will be squeezed by lower earnings from free money and their inability to lower deposit rates much more. TSB, however, has 60 per cent of its total lending in mortgages, which enjoy higher margins than ordinary bank lending and make it look more like a building society than any other bank except Abbey National.
This compares to about 20 per cent for most of the other clearers, so TSB will be better able than most to weather the continuing margin squeeze and intense competition.
The Royal Bank of Scotland's chairman, Lord Younger, is also bullish about his bank's prospects for 1994. All this augurs well for the rest of the clearers who report over the next two months.
The one disappointment with TSB is its dividend increase of only 20 per cent. But the bank's potential for dividend growth is higher than most, given the strength of its capital, this year's caution could reinforce next year's generosity. In that light, TSB's shares do not look as overbought as some of the other clearers.Reuse content