Oaknorth posts jump in profit as challenger bank targets US expansion and mulls public listing
Challenger bank Oaknorth has posted a jump in annual profit on the back of higher lending and an expansion into the US as it looks forward to a potential IPO.
The business-focused bank reported a 23 per cent increase in pretax profit to £187.3m in 2023 from £152.3m in 2022.
Oaknorth said its total loan book grew 22 per cent to £3.8bn. The London-based bank specialises in lending to businesses with revenues of between £1m and £100m and has loaned around £10.2bn since it launched in September 2015.
Since it launched in the US in the second half of 2023, Oaknorth has lent around $200m to businesses in the country.
Oaknorth plans to expand its operations in the US, with the bank making a bid for Silicon Valley Bank’s UK business, mainly serving technology start-ups, last March amid a wider US regional banking crisis.
The bank said that it had applied for a US representative office and was “actively exploring M&A opportunities” within the banking and fintech sectors there, as well as providing its software to US banks.
Oaknorth appointed former City watchdog boss Lord Adair Turner as its chairman in January ahead of a potential public listing. The SoftBank-backed lender, most recently valued at $2.8bn in 2019, has said it was considering listing across multiple exchanges to access a wider range of investors.
“Despite numerous ongoing economic challenges, this has been another strong year for Oaknorth showing consistent profitability and high growth,” said co-founder and chief executive Rishi Khosla.
“In the year ahead, we’ll maintain our firm commitment to supporting ambitious scaling businesses, whose contribution to growth is more important than ever in the current macroeconomic climate.”
The firm’s total operating costs and provisions increased by some 60 per cent to £109.4m, with loan loss provisions more than doubling to £25m.
Provisions represented 0.8 per cent of Oaknorth’s gross loans last year, up slightly from 0.7 per cent in 2022. The bank boosted spending on international expansion and a wider product offering, including business savings and current accounts.