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Specialist
SME Bank of
Choice Contents

Contents
Growing Number Improved
of Satisfied Shareholder
Customers Returns

Excellent Sustainable Reduced
Customer Growth Cost to Strategic Report
Service Income Ratio

Capital to Growth Diverse Improved
Sustain of Broker Funding Efficiency
Growth Network Base

Environmental, Front Line BI and Data Customer People and
Social and Recruitment Governance Journey Culture
Governance Transformation

Robust Risk Management and Strong Broker Relationships and Established Manual Underwriting Corporate Governance Statement
Enabling Functions Reputation Capacity

Chief Executive Officer’s Review The Bank is focused on becoming the “Specialist SME Bank of Choice”. To achieve this
the Bank has set itself a number of goals building on its core foundations.
Overview

In my first full year as the Bank’s CEO, Our strategy has continued to deliver
my focus has been on supporting our improved financial momentum throughout
customers through the financial impacts the year. Underlying performance for 2021
of the pandemic, while ensuring the well- was strong. Profit before tax increased 66% Independent Auditor’s Report
being of our colleagues. Concurrently to £18.5m (2020: £11.2m) delivering a return to attract steady inflows into notice accounts by the Covid 19 pandemic and the adverse
the management team evolved the on shareholder equity of 9.5% (2020: 6.4%). and fixed rate bond products, and maintains economic environment. It is important
Bank’s strategy to reflect the continued a prudently funded loan to deposit ratio that we play our part in supporting the
opportunities in our chosen segments, The year presented continued challenge (LDR) of 95% (2020: 91%) economic recovery through lending to
building on our core foundation of a from an interest income perspective as customers and the investment in our
people-led approach while at the same time a result of the continued low interest The Bank’s improved cost income ratio front-line relationship management teams,
modernising and simplifying the business. rate environment. Despite this, the Bank of 51.0% (2020: 55.6%) reflects good cost infrastructure development in simplifying
maintained a healthy net interest margin control in year while continuing to invest and automating our end-to-end lending
This framework encapsulates our (NIM) of 3.8% (2020: 3.7%) with the growth in key skills and capabilities in IT and processes, and additional recruitment
commitment to deliver disciplined growth in net income of 18% to £44.9m reflecting infrastructure. activity underway is well placed to deliver
and sustaining the business for the long the return to growth in gross customer on that.
term. The early signs are encouraging: assets of 18% to £992m as the Bank played We have not yet experienced any Financial Statements
We have returned the business to strong its part in funding SME lending activity meaningful crystallisation of credit losses Since the previous credit crisis in 2008/9
double-digit growth both in balance sheet unlocked by the economic recovery. as a result of Covid-19. Until the full the UK banking sector has more than
and income terms; successfully managed downstream impacts of the pandemic tripled its capital capacity across the sector
all customers through Covid forbearance, The Bank’s liability portfolio benefited from are understood, we continue to adopt a including buffers designed to absorb
while at the same time managing the risks relatively stable market pricing in 2021 due cautious and conservative outlook, reflected the ‘capital shock’ of any potential credit
in our business prudently. to the significant liquidity in the system. We in our balance sheet impairment provision losses that could emerge in an economic
were able to safely reduce the deliberate
Strong performance against a difficult liquidity headroom retained to mitigate coverage ratio of 1.5% (2020 1.5%), and have downturn. The Bank’s capital capacity has
not taken any material provision release in
never been stronger at £164m with the
economic backdrop Brexit, the pandemic, and recessionary year. The Bank’s loan impairment charge sustainable retained earnings contributing
risks. The Bank’s liquidity position remains
The Bank has navigated the Covid 19 crisis robust with a 287% liquidity coverage ratio reduced from £5.8m in 2020 to £3.5m in 59% of the Bank’s capital base. The Bank
well, and this is testament to the team’s (LCR) (2020: 419%), a diversified product 2021 and this combined with the growth in closed the year with a total capital ratio of Notes to the Financial Statements
commitment during this challenging period, and customer base, and multiple deposit loan balances results in reduction in the cost 23.0% (2020: 24.3%) and a CET1 ratio of
maintaining the passion and engagement acquisition channels including direct, of risk from 72bps in 2020 to 38bps. 19.9% (2020: 20.7%).
of our people, and delivering continued online, and intermediary brokers. With the
support for customers and brokers. The Bank delivered a strong performance in We remain liquid, well capitalised, and well
Bank in its 10th year, Cambridge & Counties 2021 but this was still significantly impacted positioned for the year ahead
Bank is an established brand and continues