Report from the Chair of the Board

Castle Trust Bank (or “CTB” ) has delivered another year of robust profits in 2025, with Profit Before Tax (“PBT”) of £9.4m.

Our profitability continues to show great resilience in the face of funding cost pressures and the challenges of a sluggish property market. With respect to growth, 2025 has seen our loan book grow by an impressive 45% driven primarily by a strong performance in the Property division. We have ended the year at a total capital ratio of 16.4%, comfortably above our regulatory requirement.

Profits have been delivered despite Net Interest Margin (“NIM”) reducing from 5.4% to 4.7% in 2025, with competition for deposits driving up the cost of funding in an environment where mix and strong lending competition have limited pricing upside.

CTB has made encouraging progress in managing down non-core property assets. These consist of legacy loans and products not offered by the Bank for many years. Closing out this tail in a slow property market does produce some impairment volatility, which has been substantially absorbed in the past two years. Whilst these legacy assets constitute a much smaller proportion (single digit %) of CTB’s balance sheet, the wind-up process has been an ongoing drag on profitability. Once complete, the transition away from these non-core assets should result in our Return on Equity (“RoE”) uplifting from the current year position of 5.4% into double-digits, notable for a bank of CTB’s scale.

Capital is an essential support for growth, and we recognise that changes to requirements will be driven by the implementation of the Small Domestic Deposit Takers (“SDDT”) regime and Basel 3.1. We are confident in our ability to respond to these changes through adjustments in asset pricing and mix.

I am very much encouraged to see the business exiting 2025 well positioned for significant near-term profitability growth and a corresponding increase in returns for investors.

Customers and Colleagues
2025 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 reflected by strong scores of +34 for Savings and +67 for Omni customers.

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, with a 94% participation rate and an overall colleague engagement score of 8.0, 0.1 above the external benchmark, These strong results contribute to very high retention rates across our talented team. In line with our values, we continue to support important initiatives such as workplace diversity, achieving Disability Confident Employer status in the year and remaining on target in the next financial year to meet or exceed our Women in Finance target of 35% of senior roles being held by females. In addition, we actively support 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. We continue to enhance our credit risk capabilities, not just in the use of data and modelling in our underwriting, but also in the ongoing monitoring and support of our customers. 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 remains responsible whilst delivering 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 very heart. 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 of our colleagues for delivering another strong performance in 2025 and I look forward to an even more successful 2026.

Kenneth Stannard
Chair