Page 11 - CCB_Annual Report_2022

10 Strategic Report 11

Against a continued volatile economic We also take a robust approach to liquidity Strategy
backdrop, 2022 has seen us successfully management and funding, as we focus on Our strategy is set against an uncertain
deliver on each of those commitments diversity of funding sources and a prudent economic backdrop. The Board’s strategy is
and we continue to demonstrate the maturity profile. This enables us to protect, one of sustainable organic growth servicing
strength and resilience of our business grow and sustain our business model. the SME (Small and Medium Enterprises)
model. The battle to control inflation and We have invested in our deposit servicing market without material uplift in risk.
return the UK economy to a sustainable capability and retain our multichannel Our strategic objectives are:
growth trajectory will be challenging, and acquisition model to attract customer
we anticipate that the continued impact of deposits. We attract steady inflows into • to continue to invest in our customer
high energy costs, supply chain disruption, our notice accounts and fixed rate savings engagement strategy and geographical
and the rising cost of living will have a products, maintaining a funding ratio of footprint to maintain our high customer
sustained impact on our customers and 87% and a Liquidity Coverage Ratio (LCR) of service and satisfaction levels, and service
our people. 361% whilst delivering a 4.5% Net Interest underserved markets;
Margin (NIM) (2021: 3.8%).
Performance • to develop our lending products to
We take a prudent approach to managing meet climate change challenges and
We delivered an excellent financial our financial resources. A fundamental help support our customers ensure their
performance this year benefitting from part of our business model is ensuring we properties are energy efficient; and
higher rates in this more uncertain have a strong capital position which allows • use proven technology to support our
environment generating a profit before tax us to grow, invest and meet all regulatory colleagues’ interactions with brokers
of £28.5m (2021: £18.5m) driven by record requirements. The Bank’s balance sheet and customers.
interest income of £76m (2021: £55m) remains robust with a strong total capital
and a 32% increase in net interest income, ratio of 24% (2021: 23%) and a Core We continue to deliver against our strategic
resulting in a sustainable 12.6% Return On equity Tier 1 ratio (CET1) of 21% (2021: priorities to become the specialist SME
Capital Employed (ROCE) (2021: 9.5%) to 20%), significantly above the applicable Bank of choice. Our multi-year investment
our shareholders. minimum regulatory requirements and our programme to drive improvement in our
peer competitors. customer journey transformation, alongside
With the external uncertainty we enhanced business intelligence and data
moderated our new business volumes Our business performed well in 2022 and governance are progressing well, delivering
Chief Executive while still delivering growth. New continued to demonstrate our financial improved customer service, and enabling
business generated a 6% increase in
resilience, notwithstanding the unusual
Officer’s Review loans and advances to £1,055m (2021: events of the year. us to protect our business in an evolving
£993m) with our manual underwriting
maintaining resilient asset quality
Overview
given the higher external interest rate
Post Covid-19, we at Cambridge & trajectory. As customers reassess their
Counties are committed to play our part investment priorities in this challenging The Bank is focused on becoming the Specialist
in supporting the UK economic recovery macroeconomic environment, our focus “Specialist SME Bank of Choice”. SME Bank of
Choice
To achieve this the Bank has set
through continued lending to SME continues to be on lending responsibly itself a number of goals building
customers in our chosen markets: whilst also helping our customers navigate on its core foundations:
the challenges they face. We remain alert Growing Improved
• Building on our core foundation of a to the pressures on our customers from Number of Shareholder
Returns
Satisfied
people led approach, investing in our rising inflation and interest rates and Customers
front-line relationship management have increased our impairment provision
teams, developing, and growing our coverage ratio of 1.6% (2021: 1.5%). Excellent Sustainable Reduced
Cost to
Growth
Customer
talent pipeline; Service Income Ratio
Underlying operating costs of £25.9m
• Investing in infrastructure developments increased 13% on prior year as planned,
to simplify and automate our end-to-end reflecting investment in our infrastructure, Capital to Growth Diverse Improved
of Broker
Sustain Growth
Efficiency
Funding Base
lending processes, accelerating access automation, and servicing capacity, and Network
to finance for our customers; and
in our people skills and capability. We
• Leveraging our manual underwriting to anticipate our investment and efficiency Environmental, Front Line BI and Data Customer People and
Social and Recruitment Governance Journey Culture
navigate a macroeconomic outlook that savings will partially mitigate the Governance Transformation
became increasingly uncertain over the continued inflationary pressures with early
course of the year, while continuing to enhancements already contributing to an Robust Risk Management Strong Broker Relationships Established Manual
monitor our customer portfolio for any improvement in the Bank’s cost income and Enabling Functions and Reputation Underwriting Capacity
adverse impacts. ratio of 44% (2021: 51%).