Specialist lender Hampshire Trust Bank more than doubled profits in 2017 as lending and deposits both surged, but its chief executive warned of a housing market “readying itself for a slowdown”.
Profit before tax rose to £9.9m in 2017, up from £4.4m in 2016, according to its latest accounts.
Chief executive Mark Sismey-Durant said the bank had made “considerable progress” in his report to shareholders. He added that he sees “significant growth potential” but that the bank is preparing for a slowdown in the housing market.
London and the South East is already feeling the brunt of the slowdown, he said, although the bank has strengthened its presence in the North and South West of England in a bid to diversify.
Hampshire Trust was relaunched in May 2014 after a management buy-out backed by distressed assets investors Alchemy. Return on equity, a key measure of shareholder profitability, rose from 5.4 per cent to hit 9.3 per cent in 2017.
The Bishopsgate-headquartered bank, which only returned to profit in 2016, specialises in asset finance, property finance for landlords, and commercial property loans for small businesses.
The bank issued £632m in loans and advances to customers in 2017, 36 per cent up from the previous year, while net interest income gained on the lending rose by 65 per cent.
A strong increase in specialist mortgages, which almost doubled to reach £192m, drove the increase. The loan book comprises bridging finance for property investors, buy-to-let mortgages, and commercial mortgages.
The bank said “credit conditions remain benign”, in spite of “prevailing economic uncertainty” in the context of the Brexit vote and the first interest rate rise in a decade, in November.
Customer deposits rose to £596m, up from £523m in 2016.