Tesco has confirmed that its launch into the mortgage market has been delayed until early 2012.
In an interim statement today, the bank says it has decided to postpone the move to ensure its launch is as smooth as possible, following glitches in its IT system for loans and savings products earlier this year.
Its statement says: “We are close to completing the migration of our existing products onto our new systems and call centre platforms as we prepare for the next stage of development in Tesco Bank, which will be driven by the roll-out of important new products – including mortgages and current accounts – beginning next year.
“This decision to delay the timing of the completion of migration and the launch of new products has implications for the financial performance of the Bank during the current financial year.
“Specifically, the focus on the completion will mean that a more active marketing campaign for existing and new products, including the launch of mortgages, will now be deferred until early 2012.”
It says this will result in a temporary extension of the period during which the Bank is absorbing double running costs.
Consequently, in combination, these will impact total trading profit during the second half of the current financial year by around £40m against its original internal target.
Tesco Bank reported a 65.9 per cent increase in profits for the first half of 2011/12 compared to the same period last year, up to £44m.
The bank has also set aside £57m for potential claims relating to the mis-selling of payment protection insurance.
Tesco reported a pre-tax profit for the 26 weeks to August 27 of £1.9bn, up 12.1 per cent on a year earlier.