Castle Trust Bank (or “CTB”) has had a strong year of delivery in 2024, in tough market conditions for challenger banks. Despite funding cost, property market and inflationary headwinds, Castle Trust Bank has maintained robust profits (Profit Before Tax (“PBT”) of £9.1m) and PBT return on equity (7.8%). We have grown our loan book by 13% overall and have ended the year at a total capital ratio of 16.8%. I am very much encouraged to see the business exiting 2024 well positioned for significant near-term profitability growth and a corresponding increase in RoE.

Net Interest Margin (‘NIM’) reduced to 5.4% from 6.5% in 2023, due to the impact of the higher interest rate environment on funding costs and a lag effect in asset repricing. This pressure will ease in the next financial year as asset prices continue to rise and cost of funds flatten.

CTB has made encouraging progress in managing down non-core property assets, products not offered by the Bank in the market for more than six years. Closing out this tail in a slow property market does produce some impairment volatility, much absorbed this year, but ultimately results in limited loss.

Inflationary pressures have put our customers under increasing strain, but work done in product design, targeting and underwriting over the past few years has reduced our overall cost of risk considerably.

Customers and Colleagues
2024 has seen an impressive array of new customer facing technology and new products in property, point of sale finance and deposits. The team has worked with customers and brokers, listening and collaborating to design the best product and process solutions possible. The change capacity of this small bank continues to surpass expectations.

Our “Customer First” value is omnipresent, and is reflected in our performance across Customer Duty, Conduct and Compliance measures. Our customer Net Promoter Score (“NPS”) continues to be very impressive.

Culturally, CTB is a great place to work with a vibrant One Bank culture, that is apparent in all of the interactions that the members of our Board and I enjoy. Employee engagement scores are top decile, resulting in very high retention rates across our talented team. In line with our values, we continue to support important initiatives such as workplace diversity and our local community through the Destination Basingstoke programme.

Our Customer and Social Responsibility Committee (“CSRC”) which is chaired by Melba Montague oversees our Environmental, Social and Governance (“ESG”) programmes with the full commitment from the Board and myself. I would like to thank Melba and the team for their excellent work on this.

Risk Focus
As Castle Trust Bank grows in its journey as a Bank, the Board remains very aware of the importance of operational resilience and sound risk, governance and controls across the business. As a business we continue to invest in our control environment both in terms of colleagues and technology to support a growing business. The Board is also very closely involved in monitoring the Bank’s progress around its Consumer Duty requirements ensuring that our products and services continue to provide customers fair value and good outcomes.

The Board and Executive Team
The Executive team has been established for several years and has a strong track record for delivering excellent business results and implementing complex change projects. As a well-capitalised bank, we are in a good position to take advantage of any attractive inorganic opportunities. Given the level of talent within the bank, I know that we would be able to successfully integrate the right target and leverage the growth potential that would come with it.

Looking Ahead
Whilst annual inflation may well have abated, prices remain high, and our customers remain challenged. Our approach to pricing and risk has adapted to this new environment and we remain highly focused on ensuring every lending decision we make delivers strong marginal returns on the equity required – across all of our product offers.

This approach underpinned by a strong capital and liquidity base means that we can look forward to delivering on our strategic plans for the Bank with our Customers at the heart of this. As the Chair I am very excited about what the next year would bring in our journey. I would like to thank the Board, our CEO, Martin Bischoff, and all colleagues for delivering another strong performance in 2024 and I look forward to an even more successful 2025.

Kenneth Stannard
Chair