OakNorth Bank has released its annual report, showing massive growth throughout 2021.
The bank revealed a 73% increase in pre-tax profits to £134.5 million, up from £77.6 million the year before. New lending also saw a rise of 60% to £1.8 billion.
With its data-driven approach, OakNorth Banks aims to support businesses within the UK with fast and flexible finance, as well as help individuals maximize their savings.
The ON Intelligence Suite, created by OakNorth for exclusive use, facilitates the rapid assessment of businesses based on data. The technology helps to understand each business’s potential for growth and identify potential challenges in advance.
Loans of £250 thousand plus are offered to ambitious businesses looking to scale up. Since OakNorth Bank’s launch in September 2015, the company has lent over £7billion to businesses across the UK, with only twelve cases of default, half of which were recovered in full. This equates to a reported average annual cost risk of 0.07%, under a third of the national average for UK banks.
‘Significant period of growth’
Rishi Khosla, CEO and co-founder of OakNorth Bank, said: “2021 marked a significant period of growth for our business. We surpassed the £100 million milestone in net income after just six years of operation.”
“We look forward to building on this momentum and supporting the change-makers, productivity drivers, job-creators, and innovators who are helping fuel the economic recovery, even as uncertainty lingers,” Khosla said.
“We have come an incredibly long way in a short amount of time and are really excited about what the future holds for our customers as we continue on our mission to empower the Missing Middle.”
Minimal climate risk
Oak North has a track record for supporting scale-up and emission compliance businesses. As one of the first banks in the world to stress-test the possible impact of climate risk on its loan book, the company has used its unique ON Climate Impact Framework and has reported it has minimal exposure concerning climate risk.
The ON Climate Impact Framework comprises part of the ON Credit Intelligence Suite. Using Data, it assesses two areas of climate risk, transition risk, and physical risk.
Transition risk focuses on how low carbon policies, investment into clean technology, changes in price elasticity, and customer sentiment impact sub-sectors, ultimately assessing the resulting credit risk for the loan.
The physical risk looks at the meteorological aspects of climate change and how extreme weather conditions may impact the Oak North loan portfolio businesses.
Improvements in all areas
As well as the growth in pre-tax profits, the cost to income/efficiency ratio also improved, dropping from 29% in 2020 to 26% in 2021. The company attributes this to scale and product investments.
The strong profitability in the past year has also strengthened the bank’s capital position by 0.6% without additional capital raisings while delivering a 20% growth in total facilities.
Isabelle is a journalist for Fintech Nexus News and leads the Fintech Coffee Break podcast.
Isabelle's interest in fintech comes from a yearning to understand society's rapid digitalization and its potential, a topic she has often addressed during her academic pursuits and journalistic career.