Tesco 2011 Annual Report Download - page 34

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To grow retail services
in all our markets
This year we’ve made progress in our retail services
businesses: tesco.com, Tesco Bank, Telecoms and
dunnhumby – our consumer research business.
We’ve been investing for the customer and laying
the foundations for future growth.
£4.0bn
Retail services sales
15%
Online businesses sales growth
30%
dunnhumby’s sales and profits up
over 30%
6.5m+
Tesco Bank customer accounts
2.5m+
Tesco Mobile customers
Introduction
In July 2008 when we announced our intention to take full ownership
of Tesco Bank, we set a target to grow the profitability of our retail
services businesses from just under £400 million in 2007/8 to £1 billion.
This year, we have made creditable progress in moving towards this
target. We have attracted new customers, grown sales and profit
and continued to invest – particularly in infrastructure – to equip the
business for further growth.
We want all of our customers, across all of our markets, to have
access to our financial, telecoms and online services. We can do this
by applying Group skill and scale and building on the knowledge
which we have acquired from our retail services experience in the
UK, Ireland and South Korea.
In 2010/11, total retail services sales were £4.0 billion, up 12% on
2009/10 and trading profit grew to £583 million*.
Tesco Bank
Despite a challenging year in the wider banking sector, and as it
completes its transition to full separation from The Royal Bank of
Scotland (RBS), Tesco Bank continues to perform well.
The business has made good progress with its systems re-platforming,
which will complete as planned in 2011. We opened our new banking
and insurance service centres in Glasgow and Newcastle in October
2010. All new motor and home insurance business, including renewal
policies sold since then have, as planned, been written on new systems.
We also launched successfully our first new product on our own
banking platforms – the Fixed Rate Saver – last autumn. This has been
followed by our recent innovative retail bond. Both of these initiatives
exceeded plan and serve to diversify our funding base and increase the
proportion of long-term funding available to the Bank.
The Bank has made progress in key areas – with savings strongly up,
good growth in the loan book with improved margins and an excellent
year in credit cards, with the transaction value up 20% on 2009/10. The
car insurance book has also resumed growth, having plateaued before
the change of control, despite the inevitable challenges of migration.
* Retail services profit comprises profit from Telecoms, tesco.com, dunnhumby
and Tesco Bank, including UK store ATM income.
30
—
TESCO PLC Annual Report and Financial Statements 2011
BUSINESS REVIEW
Growing retail services