Redwood, the British challenger bank catering to SMEs, has achieved full-year profitability less than five years after its launch.
Founded in August 2017, Redwood was ‘born in the cloud’ and became one of the fastest banks in the UK to receive its license and launch. The bank primarily focuses on providing secured SME mortgages for business owners.
Starting with a team of just 12, Redwood has expanded its workforce to over 125 employees. In the year ending December 31, 2021, the bank reported a pre-tax operating profit of £2.2 million, a significant turnaround from a £1.7 million loss in 2020. Over this period, Redwood’s loan book grew by 14% to £370 million, while deposits increased by 15% to £438 million.
Gary Wilkinson, CEO and co-founder of Redwood Bank, stated: “The fact that we made our first profit in 2021 is a testament to the robustness of our business model. We reached this milestone by continuing to provide essential lending support to British businesses during the various Covid-19 lockdowns when many mainstream lenders pulled back. We are proud to have played a part in enhancing the resilience of British businesses.”
The results indicate a strong business model, particularly in a challenging environment for startup banks. During the year, shareholders invested an additional £9.9 million of Tier 1 capital, bringing the total amount invested to £47.9 million.
Wilkinson added: “We are an established specialist bank focused on simple commercial property loans and business savings accounts, offering secured mortgages to professional landlords and business owner-occupiers. Redwood Bank fills a gap in the market where mainstream banks are hesitant to lend.”