Charity Bank recorded a loss of over £800,000 in 2013 and expects to lose more this year, according to its annual report and accounts, filed earlier this month.

The bank’s total income fell from £3.8m to £2.97m, while its loan book fell from £65.5m to £58m, the accounts show. The bank said this was due to capital constraints caused by legal difficulties around its charitable status.

The bank stopped being a charity after finding it could not comply with both charity law and the requirements of the Financial Conduct Authority. It was able to lend less money over the period it negotiated the changes.

"While the restructuring of Charity Bank has been successfully completed, its financial implications have had an impact on the Bank’s operating performance," George Blunden, chair of the bank (pictured), wrote in his introduction to the bank's accounts.

"Our capital constraints have restricted the loans we could make and, as a result, the income we could earn. These constraints, combined with the costs associated with our restructuring, made the Bank loss-making in 2013 after two consecutive years of operating profit.

"Our loss was increased by our investment in our resources and infrastructure in order to support our intended growth trajectory."

The bank has since taken on a £14.5m investment from Big Society Capital, and says it plans to expand its loan book to £250m by 2018.

The bank expects to return to profitability in 2016.