United Trust Bank (UTB) has reported a 31% increase in new lending to £1.3bn in 2020, helping to drive its operating profit to £44.1m, a 35% increase on its 2019 performance, the bank reported. 

The bank said the results demonstrate UTB’s continued commitment to supporting SME housebuilders, developers, businesses and brokers throughout the Covid-19 pandemic.

UTB strategic report*

Total assets reached £1.9bn, an increase of 33%, driven by continued strong demand for the Bank’s products and a growing distribution network.

The Bank wrote £1.3bn of new loans during the year, which was 31% more than in 2019, and the loan book exceeded £1.6bn for the first time, of which £118m was Government supported lending under the CBILS scheme.

This is a significant achievement in the context of Covid-19. The loan balance averaged over the year was 28% higher than in 2019 and this, combined with margin compression across lending divisions, resulted in interest income growth of 21% to £105.3m.

Given the higher risk environment, the Bank maintained significantly higher levels of liquidity during the initial phase of the pandemic and again during the second half of the year as the departure of the UK from the EU approached.

This reduced the efficiency of the balance sheet at times, reducing net interest income, but was considered appropriate given the economic climate.

Operating income, comprising net interest income and net fees, increased by 22% to £79.1m (2019: £64.9m). The cost of risk (being the provision for impairment losses divided by the average loan balance over the year) at 95bp (2019: 40bp) was higher than in previous years, which was mainly attributable to a small number of loans resolved during the year.

 2020 highlights include:

  • Gross new lending – £1.3bn
  • Operating Income – £79.1m
  • Operating Profit – £44.1m1
  • Loan book at year-end – £1.6bn
  • Deposits book at year-end – £1.6bn
  • Total assets reached £1.9bn
  • ROE for 2020 was 15.9%

UTB continued to recruit staff throughout 2020 to support the business growth by welcoming 42 new team members during the year with the majority of them being recruited and trained remotely.

United Trust Bank chief executive, Harley Kagan (pictured above), said: “2020 was a year like no other and despite the extraordinary challenges presented by the Covid-19 pandemic, United Trust Bank showed its resilience and delivered a strong set of results.

“The Bank has continued to invest in business transformation and digitisation projects and introduced many new digital means of interacting with customers and brokers during the year, including the launch of full-service online banking for deposit customers.

“By successfully transitioning to remote working and adopting and implementing innovative technology the Bank maintained its operations and remained open for business throughout the lockdowns with all business lines continuing to grow.”

*United Trust Bank’s Annual Report and Accounts for the period ending 31st December 2020 have been published.