Retail giant Tesco is investing heavily in its banking technology as it looks to become a major player in the UK financial sector.

Talking on BBC Radio 4 this morning Tesco finance director Laurie McIlwee said new technology was being put in place to increase the rate of growth within the Tesco banking business. He also told the broadcaster that it plans to become a significant provider of mortgages and current accounts. In its interim management statement for the third quarter Tesco said "Tesco Bank is making good progress in developing its own systems infrastructure, with partners now selected for both its insurance and banking platforms."

Tesco said its banking division continues to grow and the levels of bad debt it has "now started to stabilise with levels remaining below the industry average".

Group wide Tesco reported sales for the 13 weeks ending 28 November 2009 had increased by 8.8 per cent, with like-for-like sales in the UK up by 2.8 per cent. Tesco has aggressively expanded overseas in recent years and reported that its Asian business grew by 18.9 per cent. The European business grew sales by 5.7 per cent and the Fresh & Easy chain in the US grew by 37.4 per cent.

Talking of the UK market Tesco said it was "maintaining steady sales growth while inflation has fallen sharply across the sector, reflecting last year's commodity price increases." Tesco said these healthy figures were in part down to customers "responding well" to a double Clubcards promotion.

"We are seeing improving customer confidence and encouraging trends in both the UK and our international businesses," said Terry Leahy, Tesco chief executive of the current economy.

Tesco Direct, the online and catalogue business continues to perform well and the company reported today that it is seeing strong sales of toys, electrical equipment and entertainment.