Page 27 - CCB_Annual Report_2022

26 Strategic Report 27

Continued growth

in our customer

base, our people and
Loans and liquid assets
The Bank’s balance sheet reflects good
growth in each of its Real Estate Finance, financial strength
Asset Finance and Classic Cars & Sports
vehicle loan portfolios in 2022. Gross
Loan balances increased by £62m to
£1,055m (2021: £993m), an increase of
6% as customers continued to invest
in UK property assets and finance their
business aspirations.
The Bank’s portfolio of £942m (2021:
£900m) commercial loans is secured
on property, lending to experienced
commercial and residential property
investors as well as to owner occupied
businesses to invest in their own
commercial premises.
The Bank ‘s Asset Finance business provides
finance for businesses to acquire essential
assets such as equipment, plant, machinery,
or vehicles using hire purchase and finance
lease facilities. The Bank’s customer
exposures increased from £54m to £71m
during 2022. The Bank also provides finance Sources of funding Operating income Expenditure
for the purchase of classic cars and sports The Bank’s lending is primarily funded by Total operating income for the year was We continue to invest in the business,
vehicles using hire purchase and finance the acquisition of UK savings balances £59.3m (2021 £45.0m). with total operating expenses (including
lease products which increased from £36m through a range of deposit products depreciation) increasing from £22.9m
to £42m in 2022. Interest income increased by £20.6m
available direct to business customers driven by the growth in lending balances in 2021 to £25.9m. The key driver of the
All of the Bank’s Asset Finance and Classic and available to retail customers through and higher rates of interest. The increases increase in costs was the increase in the
Car & Sports Vehicle loans are set at a fixed a network of Deposit Intermediaries. in bank base rate were passed on in full to Bank’s staff costs.
rate with the majority of its Real Estate loans Business customers include several broader all customers with a variable rate loan. New The Bank continues to invest in its own
linked to bank base rate. organisations such as charities, clubs, fixed rate loans were drawn at higher rates staff with minimal contractor expenditure.
societies, and associations.
The Bank’s liquidity portfolio comprises high reflecting the increased cost of funding. During the year the Board agreed a one-off
quality liquid assets, primarily cash reserves The Bank grew its deposit portfolio during Interest payable increased by £6.3m as a payment of £1,000 per employee to help
at the Bank of England, International Bank the year within the Board’s funding and result of an increase in the interest rates support staff manage the increased cost
Reconstruction and Development Bank and liquidity risk appetite from £1,026m to paid on the Bank’s deposit accounts. of living. The average number of staff
European Investment Bank bonds which are £1,103m, to support the lending activity. employed during the year increased from
available and accessible to meet potential The Bank has made good progress in The Bank continues to generate a strong 183 in 2021 to 206 in 2022.
cash outflows. delivering against its strategic goal of asset yield of 5.8% (2021: 4.7%) with the The Bank continued its investment in its
increasing the value of deposit balances increase principally reflecting the increase
A key regulatory measure of liquidity acquired through the direct channels with in bank base rate during the year. IT systems, increasing its resilience and
adequacy is the LCR, which is designed less reliance on Deposit aggregators for security as well as implementing a new real
to assess the short-term resilience of new funds. The Bank’s liability yield was 1.3%, an estate loan application processing system
the Bank’s liquidity risk profile. The Bank increase of 0.4% compared to 2021, and Management Information reporting
monitors liquidity daily to ensure it has The cost of funds increased during the reflecting the increase in the market rates system.
sufficient funds available to meet maturing year reflecting increases in the rates offered to deposit customers. The cost of The Bank’s cost: income ratio reduced
liabilities and uses a range of metrics to offered across the market as well as higher the Bank’s deposit balances increased from from 51% to 44% in 2022 with the increase
monitor this. The Bank’s liquidity position forecasts for UK bank base rate over the 1.06% in 2021 to 1.5%. in costs more than offset by the strong
remains robust with a 361% LCR (2021: next few years. The mix and tenor of In total, the Bank’s net interest margin growth in income.
287%). The LCR increased during the year the Bank’s deposit balances enabled it increased from 3.8% to 4.5% in 2022.
reflecting the growth in the Bank’s liquid to mitigate an element of the impact of
assets which was funded by a higher the 3.25% increase in UK bank base rate
proportion of direct acquired customer announced during 2022 with over 40% of
balances as well as an increase in the tenor. balances held in fixed rate accounts.