By Scott Kanowsky
Investing.com -- Shares in Tesco PLC (LON:TSCO) edged marginally higher in early trading on Monday after Sky News reported that Britain's biggest supermarket chain has hired Goldman Sachs (NYSE:GS) to advise on future plans for its financial services division.
Tesco will launch a review of its operations in the U.K. banking sector, Sky News said, adding that this may lead to an eventual sale of the business.
Citing "city insiders," Sky News said the review is in a preliminary stage and may not end up with the unit being sold. One source quoted by the outlet claimed that a partial sale or joint venture may be another potential option.
Scotland-based Tesco Bank brought in £400 million (£1 = $1.2050) in sales in the 19 weeks to January 7, according to the company's third-quarter and Christmas trading results, a like-for-like increase of 14.6% driven by a post-pandemic "normalisation" of customer demand that caused an uptick in credit card spending and ATM transactions.
For the 2022/2023 fiscal year, Tesco also backed its guidance that the banking arm will deliver adjusted operating profit of between £120M and £160M.
"We're able to confirm the guidance range that we put out there for the Bank simply because of the great credit control management that we have in place. In fact, I would say to you, the quality of the book that we have has improved over the years," said Tesco's chief financial officer Imran Nawaz in an earnings call in January.
Neither Tesco nor Goldman Sachs commented on the Sky News report.