Tesco Bank current account launch will slow profits growth

11th Dec 2013 08:26

Tesco's banking arm has revealed plans to launch its current account in the new year but admitted this will hit profits at the division.Benny Higgins, Chief Executive of Tesco Bank, cautioned that profitability will be "tempered" for a period as a new account takes "quite a few years" to reach maturity.The company intends to begin testing early in the year ahead of a full launch later in the first half of 2014.The creation of a Tesco current account is expected to create 600 jobs over the next few years, with the company saying 300 of these would be added early next year.The FTSE 100 group has wanted to launch a current account since it bought full control of the financial arm created in partnership with Royal Bank of Scotland in 2008.But Tesco Bank only completed the migration of credit card, loans and savings accounts from RBS's systems to its own platform in May last year as it completed the three year process of its infrastructure and systems build. Third-quarter results from Tesco on December 4th said sales at the Bank increased by 0.9%, with an increase in interest income from strong lending growth offset by reduced fee income across our insurance business, after making an £88m profit in the first half of the year. Higgins said that the launch was timed to follow the beginning of the switching service regulation that is intended to make switching accounts easier. Shares in Tesco were up 0.14% at 332.4 at 09:05 on Wednesday.OH