Tesco prioritises IT for banking arm, as profits reach £3bn

Tesco's IT work to support development of a full retail bank will be a priority for the company in the coming year.

Tesco's IT work to support development of a full retail bank will be a priority for the company in the coming year.

The company made the disclosure as its financial results show its sales now topping £1bn a week.

Tesco today reported its highest ever profits, with a 12.4% rise in group trading profit to £3.09bn. Group sales grew 15.1% to £59.4bn.

Tesco plans to create 11,000 new jobs in the UK, with a particular emphasis on its expansion of Tesco Personal Finance (TPF).

The supermarket bought a 50% shareholding in TPF from the Royal Bank of Scotland last July, and set a target to grow profits from £400m in 2007/08 to £1bn in the next few years.

The company says in its financial results, "The business is profitable and well-capitalised, which is a strong platform from which to pursue our plans to develop TPF from a successful, popular collection of financial products to a full-service retail bank in the years ahead."

The TPF team, a mixture of Tesco managers and staff from the banking industry, is currently migrating systems and customer support over to Tesco's own platforms. Work is also being done on the development of a branch network in Tesco stores, and the development of new products.

IT is also important to Tesco's "Step Change" program, which, the company says, "brings together many initiatives to make what we do better for customers, simpler for staff and cheaper for Tesco."

As part of this, 3,100 employees in India now provide IT support to the company's UK and international operations.

New checkout technology is also part of the program. Around 25% of UK customer transactions are through self-service checkouts, which the company says has reduced costs and made the process easier for staff. The Step Change Program as a whole saved Tesco £540m in a year.

The results also reported a successful year for the company's website. Its online businesses saw a 20% increase in sales to £1.9bn, with profits at £109m.

Catalogue service Tesco Direct, managed within Tesco.com, makes non-food products available via the internet. The company reported "excellent sales growth" and said clothes would be next to be offered online, later this year.

Read more on IT strategy