Page 25 - 86395_CCB - 2024 Annual Report (web)

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reflecting earnings on the net carrying
amount of impaired stage 3 assets. The
impairment charge is calculated using
the Bank’s granular credit grading and
IFRS9 impairment models. The models
include forward looking economic
scenarios which together with the
related weightings, provided in Note 29,
are reviewed and updated on a regular
basis to ensure they reflect actual
performance as well as Management's
future expectations.
The Bank has recorded an annual
cost of risk of 42bps (2023: 67bps) with
the reduction in the loan impairment
charge being partially offset by the
growth in total loan balances. The
Bank’s loan loss provision coverage ratio
was 1.7% at the end of 2024, lower than
the 2.1% reported in 2023 but in line
with the 1.6% at the end of 2022.

Subordinated debt liability –
Tier 2 Capital
The Bank has drawn £5m of its £20m
Tier 2 capital facility with British
Business Bank Investments (“BBI”) –
a subsidiary of British Business Bank
(“BBB”). The loan notes have an initial
coupon rate of 11.5% for the first 5 years
and mature after 10 years. The Bank
paid the coupon in August 2024.

Taxation

The taxation charge of £8.2m (2023:
£9.6m), reflects a corporation tax rate
of 25.0% (2023: 23.5%). The taxation
charge includes a £141k credit (2023:
£101k charge) in respect of deferred tax,
and a credit of £244k in respect of the
Bank’s convertible loan note interest
payment (2023: £516k).

Dividends and convertible loan
note payments

The Bank paid a £2.5m coupon on
valuation concerns and therefore the Bank 30 September 2024 (2023: £2.2m) in
no longer considers it necessary to include interest payments on the convertible
this adjustment in its Expected Credit Loss. loan notes to Cambridgeshire County
The PMA which totalled £611k at December Council Pension Fund, the holder of the
2023 has therefore been released. loan notes.
The IFRS 9 income statement The Board did not pay an ordinary
impairment charge was £4.9m in 2024, share dividend in 2024. The Bank
a reduction of £2.3m compared to 2023 remained focused on reinvesting
(£7.3m). The charge reflects net write‑offs retained earnings to maintain a strong,
of balances totalling £2.9m, an increase well‑capitalised balance sheet to
in balance sheet provisions of £2.6m support strategic growth aspirations.
partially offset by a credit of £0.6m