By Ian Walker

LONDON--TSB Banking Group PLC (TSB.LN) Friday reported a 29% rise in pretax profit over the past three months, and said it is on track to provide mortgages from the first quarter of next year.

The firm, which was spun-off by Lloyds Banking Group PLC (LYG) in June, made a pretax profit for the quarter ended Sept. 30 of 33.1 million pounds ($53.07 million), up from GBP25.7 million for the quarter ended June 30. On a management, or adjusted basis, pretax profit rose 32% to GBP41.6 million.

TSB said it remains strongly capitalized with a pro forma common equity tier 1 capital ratio of 18.8%, compared with 18.2% at June 30.

"While it remains a five year journey, TSB continues to build on the strong start to life as an independent listed business. Our performance has been in line with expectations and reinforces our credentials as Britain's Challenger Bank," TSB said.

Lloyds still holds 50% of TSB. It was ordered by the European Union in 2009 to sell at least 600 branches as a condition for getting state aid. The FTSE100-listed financial-services firm, which is still 24.9% owned by the U.K. government, must divest its remaining shares in TSB by the end of next year.

Write to Ian Walker at ian.walker@wsj.com

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