OakNorth sees profits soar as it continues to weather Covid-19 storm

OakNorth Bank saw its pre-tax profits surge in 2020 as its lending reached over £5.1bn to date. 

OakNorth’s pre-tax profits reached £77.6m in 2020, an increase of 18 per cent on the year before when profits topped £65.9m.

Throughout 2020, the alternative lender dished out a total of £1.1bn in loans, bringing its total to over £5bn lent out to more than 170,000 customers since its launch in 2015.

Rishi Khosla, CEO and co-founder of OakNorth Bank, said: “Given the challenges of the pandemic on society and the economy over the last year, OakNorth’s mission- to empower the Missing Middle- has never been more important.”

OakNorth, which was the first challenger bank to break even after just two years of operation in 2017, says it has only seen ten defaults since its inception, six of which have been resolved with 100 per cent recovery.

Despite the small number of defaults recorded on its books, the ten defaults were worth nearly £100m, with the biggest default being £41m lent to a now-bust luxury property developer in 2019, according to an investigation by the Financial Times.

Khosla added: “They [SMEs] will play a vital role in the post-pandemic economic recovery, so we’re proud to have continued supporting them through not one by two unprecedented events- the Brexit vote and the withdrawal process that followed, and Covid-19. In doing so, we’ve been able to build a robust and profitable business supported by 170,000 savers.”

OakNorth also saw customer deposits jump up to £2.3bn in 2020, up from £2bn the year previous, a 15 per cent increase on the year before.

As well as building on its solid foundations here in the UK, OakNorth has been setting down roots across the pond over the past 12 months.

In January 2021, the bank won its latest customer Old National Bank, a regional US bank based in Indiana, which will use OakNorth to provide stress-testing and risk management across its commercial and industrial loan portfolio.

Prior to this, OakNorth has made a series of executive appointments in the States and partnering with New York-based Modern Bank to help support US businesses, as well as Customers Bancorp, which will use OakNorth’s credit analysis and monitoring platform.