The number of loans approved by Charity Bank has fallen by almost half, from 91 in 2011 to 47 last year, according to the social lender’s accounts for the year ending December 2012, published last week.
The value of new loans it agreed fell from £26m in 2011 to £9m in 2012. The bank, which lends only to charities and social enterprises, says the fall is down to new rules laid down by the Financial Services Authority governing its ability to raise capital. In March, the bank said it would give up its charitable status to avoid a conflict between the new rules and charity law.
"Our inability to raise capital has led to us restricting our activity in soliciting new loan opportunities," the bank says in the introduction to its accounts. "This has meant a fall in the number of new loans we have approved by nearly half, from 91 in 2011 to 47 in 2012."
But the bank still showed a surplus of £106,000 in the year. The accounts say its outstanding loan book has increased by 12 per cent, to £62m, and its balance sheet has increased from £81m to £93m.
In March, chief executive Patrick Crawford told Third Sector that he expected the bank would be able to increase its balance sheet in the next five years from £93m to about £250m. He said he expected new investment to come mainly from charitable foundations and other social investors.
Crawford said that if Charity Bank had continued to operate as both a bank and a charity, the new FSA rules would not have allowed it to take this type of investment and it would have had to rely on grants to raise funds.