The number of new loans approved by Charity Bank during 2012 fell by almost half compared with 2011, from 91 to 47, and their value plummeted from £26m to £9m.
The figures expose the difficulty that Charity Bank has had recently in raising enough capital purely by securing grants, as its present constitution as a charity dictates it must. This is why the Bank has decided to relinquish its charitable status, as announced last month – so that it can raise capital in other ways.
Its accounts to the year ended 31 December 2012 state: “While our outstanding loan book is healthy … our inability to raise capital has led to us restricting our activity in soliciting new loan opportunities.
“This has meant a fall in the number of new loans we have approved by nearly half, from 91 in 2011 to 47 in 2012.”
Lower operating surplus
The bank’s operating surplus also fell in comparison to 2011. That year’s surplus, the first ever posted by the Bank in its ten-year lifespan, was £372,000. In 2012 this fell to £106,000, well short of its targeted £254,000.
The Bank attributed the shrunken profit to lower interest income and reduced fees and commission income caused by the constraints on new loans; restructuring and staff costs, and the need to provide an extra £280,000 for bad and doubtful debts.
However, gross loans and advances to customers increased by nearly 12 per cent from £55.6m to £62.1m and the amount of deposits held grew from £65.5m to £79.5m, a rise of 21 per cent.
Overall, the balance sheet total increased from £80.5m to £93.3m.
Healthy loan pipeline
And the trustees’ report states that despite the restriction in lending activity, there is a healthy pipeline of proposals at various stages of the approval process. “In pursuit of our mission during 2012, the Bank generated 604 loan enquiries for a total of £197m and created an £8m pipeline of lending opportunities.”
Among its objectives for 2013 and beyond, Charity Bank hopes to obtain new investment by way of ordinary shares from investors totalling at least £4.5m in 2013 and £5m each in 2014 and 2015.
As previously announced, it aims to grow its balance sheet to around £250m by 2017, and admits it expects to incur small losses over the next two years as it invests in growing its activities.
CEO: Charity Bank is a community
Chief executive Patrick Crawford, in his CEO's report, wrote: "I see Charity Bank as a community, a group of investors, borrowers, trustees, staff, and depositors who are bound together by a common purpose. In banking that is both a unique and hugely compelling proposition.
"It is my job to ensure that this community works better, with the dedicated purpose of increasing social inpact and the improvement of lives. "
The Charity Commission published its consent, scheme, and advice regarding Charity Bank's conversion to a non-charity on 25 March 2013. Provided there are no objections, the change is expected to take effect by the end of this month.
