Redwood, the British challenger bank for SMEs, has hit full-year profitability less than five years after launching.
Redwood opened in August 2017 after being ‘born in the cloud’ and achieving one of the fastest licence-to-launches in UK banking history, with a focus on offering secured SME mortgages for business owners.
The specialist lender, which started with a team of 12 and now employs more than 125 employees, has posted a pre-tax operating profit of £2.2 million in the year to December 31, 2021, compared to a £1.7 million loss in 2020. Over the period, the bank saw its loan book increase by 14% to £370m and notched a 15% rise in deposits to £438m.
Gary Wilkinson, CEO and co-founder of Redwood Bank, says: “The fact that we made our first profit, in 2021, is testament to the robustness of our business model. We reached this milestone because we continued to offer vital lending support to British businesses during the various Covid-19 lockdowns, when many other mainstream lenders retrenched. We are proud to have played our part in bolstering the resilience of British business.”
The results point to a resilient business model at a challenging time for most startup banks, , with shareholders investing a further £9.9m of Tier 1 capital in the Bank during the year, increasing the total invested to £47.9m.
Says Wilkinson: “We are an established specialist bank focused on simple commercial property loans and business savings accounts, offering secured mortgages to professional landlords, and business owner occupiers. Redwood Bank plugs a gap in the market where mainstream banks prefer not to lend.”