OakNorth, the challenger bank that recently claimed unicorn status, has backed up that claim with impressive financial results.
The bank notched £10.6m in profit last year, keyed by substantial growth in its lending. It has now topped £1.2bn in gross lending in the UK, up from just £300m a year ago.
OakNorth specialises in loans of between £0.5m and £30m for businesses and property developers. It has lent money to more than 200 UK businesses to date, while also supporting the creation of 5,100 new homes and 4,000 new jobs in the UK. Its clients include well-known names such as Leon, NetPay and The Collective.
In addition to offering a range of savings products, including easy access and fixed-rate ISAs, OakNorth also has a licencing business which involves selling its lending technologies to established banks around the world. This piece of tech, known as the Acorn machine, is seen as key to OakNorth’s lofty valuation. It makes use of machine learning and other cutting-edge technologies to fuel data-driven decision-making.
Note, however, that the 2017 financial results apply only to OakNorth Bank and not to the holding company, which includes both the bank and the Acorn machine. It is this holding company that carries unicorn status.
The group became a so-called unicorn in 2017 when it raised £154m from The Clermont Group, Toscafund and Coltrane. That round was then extended to allow room for GIC, Singapore’s sovereign wealth fund, which piled in with an extra £90m in equity capital.
“It has been another exceptional year for OakNorth; we have solidified our position in the SME lending market, providing over £1 billion of gross lending in the UK, helping hundreds of businesses achieve their growth ambitions. Despite the exceptional growth of our loan book, we have ensured that the quality of credit has not been jeopardised, as evidenced by the fact that we’ve not had a single default to date,” said Rishi Khosla (pictured), CEO and co-founder of OakNorth.
Khosla forecast “unique” challenges over the next 12 months, as businesses ready for the UK’s long-awaited departure from the EU. However, he pledged to continue building OakNorth’s loanbook during the period, saying that the bank plans to lend “at least another £1bn” in 2018.
You can learn more about OakNorth by tuning into episode 16 of Millennial Money Matters below.