OakNorth profits rocket

The challenger bank has reported substantial growth in profits and lending for last year.

It is fair to say that in the past 10 years of ever more fintech disruption cold hard profits have not been front and centre of growth-minded UK firms who have been happy to burn cash in the pursuit of rapid expansion.

Could things be about to change? Europe’s most highly valued fintech OakNorth bank has a reported a whopping 220 per cent increase in profits in 2018, up from £10.6m in 2017 to £33.9m.

The challenger bank says its total loan facilities also grew by 160 per cent, from £850m in 2017, to £2.2bn in 2018 as the firm rapidly lent out cash to SMEs and property develpers.

OakNorth, which has now lent over £3bn since its launch in September 2015, has a loan book currently at the £2.5bn level. It offers loans of £0.5m to £40m to SMEs and property developers and investors as well as licensing its fintech platform, OakNorth Analytical Intelligence, which is currently licensed via a white-label agreement to seven banks.

To date, OakNorth says it has not had a single default, and the last 12 months saw it receive, over £400m of repayments. Lending is partly supported through its 40,000 savings customers.

It recently closed a $440m investment round led by SoftBank, with the funds prepped to power ambitious global growth plans. OakNorth Analytical Intelligence this week, as part of the strategy, strengthened its leadership team with two new hires, appointing Nikolai Varma as Chief Commercial Officer and Rikard af Ekenstam as Managing Director, Corporate Development.

The firm, founded by Rishi Khosla and Joel Perlman in 2015, has seen $1bn of total funding from investors such as the Clermont Group, Coltrane, EDBI of Singapore, GIC, Indiabulls, NIBC, Toscafund as well as the SoftBank Vision Fund.

Rishi Khosla, CEO and co-founder of OakNorth, says the companies it is lending to are typically "home-builders, job-creators, productivity-boosters, and drivers of GDP growth" helping to transform the health of the wider economy.

“Through the licensing of our platform, OakNorth Analytical Intelligence, to bank partners around the world, we will bring a similar impact to entrepreneurs and communities globally.”

Going forward, OakNorth’s holding company – OakNorth Holdings Ltd. – will be donating 1 per cent of group net profits to supporting charitable causes and social entrepreneurship, it said.