Bank backed by Cambridge University tops £500m of small business loans

A bank backed by a Cambridge college loaned out more than half a billion pounds to small firms, less than five years after it launched.

Cambridge & Counties, which is jointly owned by Trinity Hall, part of the University of Cambridge, and Cambridgeshire Local Government Pension Fund, saw its loan book increase by 41pc last year, rising from £416m to £588m, while deposits at the bank increased by 45pc to £685m.

Pre-tax profits rose from £10.2m in 2015 to £18.1m in 2016.

C&C was established in mid-2012 to support small and medium-sized businesses. The aim was to use long-term funds controlled by the college, which was founded in 1350, and the pension fund to fill a perceived gap in the market by lending to companies with a turnover and assets of less than £25m, a move which the bank hoped would generate profits as well as fulfilling a socially useful purpose.

Competition has increased in the market since 2012, when the big banks were still in recovery mode after the financial crisis.

Since then Lloyds and Royal Bank of Scotland in particular have worked to increase lending to businesses, while a swath of smaller banks has increased lending in niches such as asset finance.

But C&C insists there is still plenty of room for it to grow and meet its objectives. Chief executive Mike Kirsopp said: “It is putting pressure on margins right across the market. We continue to have a good healthy appetite to lend in that market, but it is harder to find the growth rates we were expecting three or four years ago.

“But that total market has expanded considerably for things like cars and vans and trucks. Following a period of lack of investment, up to 2012-13, general investment has seen a bit growth in 2014, ’15 and ’16.”

Other parts of the market are continuing to grow rapidly, Mr Kirsopp said, as investment plans accelerate, defying fears of an economic slowdown. “In commercial lending, we have leisure and hotels, all way through to industrial and office developments. There is growing demand across all of those,” he said

“A particularly strong area is the industrial sector, the small industrials sector. There is no slowdown there, no affect from Brexit at all.”

The buy-to-let part of the bank, which largely serves professional landlords in the midlands and the north of England has also seen no sign of a post-referendum slowdown, Mr Kirsopp said. The bank wants to grow that business into the south of the country as well, via its Bristol office.

C&C expects growth in 2017 to be similar to the surge it experienced in 2016. It has increased its workforce from 94 to 121 as part of an effort to serve those extra customers and win new business.