Charity Bank tripled its loan commitments to £33m but lost £1.1m in 2014

Charity Bank
Charity Bank

The social lender Charity Bank made loan commitments worth £33m in 2014, nearly three times as much as in 2013, its accounts show, but made losses of £1.1m and will take longer to break even than previously forecast.

The bank, which gave up its charitable status in 2013 because of changes to financial rules on capital introduced in response to the economic downturn, received 155 applications for loans in 2014, 20 more than in 2013.

In 2014, it made commitments to loan a total of £33m to 81 different organisations, compared with the £12m committed to 59 organisations in 2013. This equates to the average loan size doubling from £203,000 to £407,000.

In early 2014, Big Society Capital announced its commitment to invest £14.5m in Charity Bank; after this the bank increased its loan limit to £2.5m, or £3.5m for housing associations. Its limit was previously £1.5m, although between January 2013 and March 2014 it approved only three loans in excess of £750,000. It has also more recently taken on a £1m investment from the Mercers' Charitable Foundation.

Patrick Crawford, chief executive of the bank, said that entering this larger-value market had slowed the flow of business. "The conversion of inquiries to approved loans commitments took longer than expected," he said. He said the bank had fallen behind its business targets in 2014, with drawn loans totalling £55.1m at the end of 2014.

But this figure had increased to £61m by the end of April this year, with operations speeding up. Crawford said: "We’ve turned the corner on that in 2015. We’re close to our targets now and expect to be on target by the end of May. We’re back on track and catching up."

Crawford did not say what was the bank's target for the end of May, but he said it aimed to have £250m of drawn loans by 2019.

The cost of expanding the bank’s operations and workforce for future growth affected its bottom line, Crawford said. The bank’s accounts show that it made a loss of £1.1m in 2014. Last year, the bank made a loss of a little more than £800,000; it said at the time that it expected to be "close to break-even in 2015" and to become profitable in 2016.

Although Crawford said 2014’s loss was "broadly on track with the predictions we had", he said the bank was now expecting to break even by the end of 2017 and was expecting losses in 2015 and 2016. He said: "Banks that are growing have to invest ahead of the business. The board of Charity Bank perfectly understand that and are very clear that we’re sticking to the mission and value of Charity Bank."

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