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A multi-award-winning specialist business bank has announced it has doubled its profit before tax just months before it expects to complete a reverse takeover to go public.
Redwood Bank, which is this year celebrating its seventh anniversary, has grown its profit before tax for the third successive year, revealing a 2023 increase to £5.5m from £2.3m in 2022 and £2.2m in 2021, the first year it reached profitability.
In October last year, Redwood announced its parent company, Redwood Financial Partners Ltd (RFPL), had signed Heads of Terms for the reverse takeover of R8 Capital Investments plc (R8), a company listed on the London Stock Exchange, in a strategic move to raise capital.
Gary Wilkinson, CEO and Co-Founder, said: “I am incredibly proud of our results, especially as we stand on the verge of a momentous event in the Bank’s story.
“From a standing start, and despite battling the formidable headwinds created by a mix of the pandemic, Brexit, a cost-of-living crisis and rising Bank of England base rates, Redwood Bank has achieved incredible results.
“Our proven business model has secured the trust of our brokers and customers, who know we will go the extra mile to support them to grow their businesses. We have never shied away from the challenges; rather we have met them head-on and the profits we have achieved are testament to our commitment to back British business.”
The increase in profit of £3.2m was driven mainly by an increase in net interest income of £8.0m, partially offset by higher impairment charges of £0.3m, and higher administrative costs of £4.4m. Our Common Equity Tier 1 (CET1) capital, as at the 31 December 2023, was £46.8m (2022: £41.4m), exceeding the regulatory minimum required.
The Bank’s loan book increased by £11m to £414m and total customer deposits increased by £53m to £500m.
Gary said: “The planned reverse takeover will allow the Bank to grow the balance sheet significantly without proportionately increasing costs, and enable us to deliver enhanced stakeholder value.
“Supporting the successful completion of the reverse takeover is currently an area of key focus for us and we hope it will be finalised in Q3.” Jonathan Rowland, Chairman and shareholder of RFPL and R8, said: “I am delighted to see such a strong set of results for the Bank, and the reverse takeover will provide a fantastic opportunity to launch an exciting new chapter in the Bank’s future development.”