Cynergy Bank delivers 63% growth in profit before tax in 2020
Cynergy Bank – the human digital bank which is committed to providing the high tech, high touch banking solutions for SMEs seeking to scale up and drive economic growth – has reported significant improvements in its financial performance for the year ending 31 December 2020 against a difficult pandemic backdrop. The income statement can be found in the notes to editors of this announcement – and the full Annual Report and Accounts can be found here.
- The Bank saw growth in both its net lending position and customer deposits:
- Net Lending up 13% from £2.3bn in 2019 to £2.6bn in 2020. Second straight year of growth from £1.7bn in 2018.
- Customer deposits up 9% from £2.2bn in 2019 to £2.4bn in 2020. Second straight year of growth from £1.8bn in 2018.
- Net Interest Margin (NIM) continues to improve – now standing at 2.88%. This is up from 2.62% in 2019 and 2.44% in 2018.
- Costs grew as the bank invested for growth – up to £46m from £42m for 2019. But the investment in efficiencies and cost management saw continued improvement in the cost to income ratio – with it falling from 71% in 2019 to 59% in 2020.
- Non-performing exposures increased by 9bps to 0.96% (2019: 0.87%) but this is still below the level of 2018 (1.03%). Provision for credit losses stood at £5m – up from £0.3m in 2019.
- Profit before tax (PBT) was up 63% to £27m (2019: £16.6m/2018: £6.2m).
- Underlying PBT was up 49% to £30m (2019: £20.1m/2018: £13.1m).
- Return on Equity up 259bps to 11.2% (from 8.6% in 2019 and 3.9% in 2018).
- CET1 Ratio stands at 14.1% with Total Capital Ratio at 16.4%.
Nick Fahy, chief executive of Cynergy Bank said: “In an historically challenging year, we worked tirelessly to support our customers, including becoming an accredited member of the Coronavirus Business Interruption Loan Scheme (CBILS) through which we lent over £100m in 2020. Further, we provided 625 payment holidays to 450 customers, the majority of which have now returned to full payments. I am pleased with how our team handled themselves over this difficult period, remaining calm and dedicated to supporting our customers, whilst delivering on our objectives for 2020, including an underlying profit of £30m, an increase of £10m despite the pandemic, lending growth of 13% to £2.6bn and underlying RoE of 13.1%.
“Although this is a fluid situation, reflected in the most recent lockdown in 2021, our prudent lending approach has ensured the book is resilient to economic shocks and allows us to remain open for business with the pipeline returning to pre-pandemic levels, providing renewed optimism for the year ahead.
“Our business proved resilient to the uncertain economic conditions in 2020, absorbing an increase in provisions while delivering a 49% increase in underlying profits and maintaining strong capital and liquidity ratios. Our loans have grown by 13% year on year to £2.6bn through the delivery of the pre-pandemic pipeline across our key lending pillars of property, business & commercial and private, and supplemented with the addition of CBILS lending. This has supported an underlying return on equity of 13.1%, our second year of double-digit RoE and underlying PBT of £30m, which has increased by £10m on 2019 despite the pandemic. Our provisions for credit losses were c.£5m in 2020, increasing year on year, as a result of Covid economics which underpin the IFRS 9 provision calculations.
“2020 was an important year for Cynergy Bank as we began our journey to deliver the first human digital bank supported by our material investment in technology, partnering with Google Cloud and Wipro Limited to continue to innovate in the human digital space.”
New chairman
Cynergy Bank, has also announced the appointment of Euan Hamilton to the role of chairman. Euan is currently senior independent non-executive director and chairs the Remuneration, Nominations & Corporate Governance Committees. He joined the Board in 2016.
Euan is a seasoned industry senior leader with extensive experience in the banking industry. He has held senior executive roles with RBS including deputy CEO of the Bank’s Non-Core Division, and global head of its Sponsor Coverage and Leveraged Finance businesses. Euan was also director, Restructuring & Recoveries with Bank of Cyprus Group and he is a Fellow of the Chartered Institute of Bankers in Scotland.
With the appointment of his successor as chairman, Phil Nunnerley is retiring as chairman of Cynergy Bank in June 2021. Phil has been a non-executive director of Bank of Cyprus UK (now Cynergy Bank) since 2012 and was appointed chairman in 2015. Kim Rebecchi will replace Euan as senior independent director. Kim joined the Board as independent non-executive director in 2017 and is currently chairman of the Risk Committee.
Phil Nunnerley commented: “After nine years working with the Bank, it is the right time for me to step down. Euan is an outstanding choice to succeed me and I am confident he will prove an invaluable addition to the Board. Cynergy is a fantastic business and it has been a privilege to serve as its chairman. I wish the company ongoing success in the future.”
Euan Hamilton commented: “It has been a great honour to work alongside Phil at Cynergy Bank and I am delighted to now be given the opportunity to take on the role of chairman. I look forward to working with Nick and the team to drive forward the bank’s strategy and ensuring that it continues to create significant value for all stakeholders.”
Nick Fahy, chief executive of Cynergy Bank, said: “I am delighted Euan has been appointed as chairman. Euan has an outstanding record of value creation and as we continue to build the human digital bank of the future, his wealth of experience will be invaluable.
“I would also like to take this opportunity to thank Phil, who retires from the role of chairman, for his exceptional contributions to the business over the years. We wish him the very best for the future.”