Rate rise will not leave challenger banks exposed says Hampshire Trust chief executive as profits surge

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The bank is headquartered in on Bishopsgate (Source: Getty)

A widely expected interest rate rise from the Bank of England will not leave the specialist lending sector exposed, according to the chief executive of a challenger bank which has seen profits surge in the last year.

Hampshire Trust Bank recorded rapid profit and loan book growth in the first half of 2017 said its chief executive, Mark Sismey-Durrant.

Pre-tax profit reached £5.3m in the year to 30 June, compared to £4.4m profit for the whole of 2016, according to figures seen by City A.M.

Read more: Revealed: Hampshire Trust Bank more than doubles new lending in 2016

Meanwhile total loan assets rose by 25 per cent to £580m during the six-month period, with expansion across all three of the specialist lender’s divisions.

Hampshire Trust relaunched in May 2014 after a management buy-out backed by investment house Alchemy, which specialises in distressed businesses.

The bank returned to profit in 2016. It has since seen rapid growth across its three roughly evenly spread main segments, asset finance, property finance, and commercial mortgage lending, according to Sismey-Durrant.

The bank expects continued “steady growth” across its commercial mortgage and property development loan books, Sismey-Durrant said, with new plans to open an office in Leeds.

Read more: Why being a challenger bank takes more than just a re-spray

In August the Bank of England warned of stretched valuations in the commercial property market, particularly in London’s West End. However, Hampshire Trust is relatively insulated from any fall in large commercial property, Sismey-Durrant said, with a focus on small business premises lending in other parts of London and the UK.

The Bank of England has also warned repeatedly of “pockets of risk” in some parts of the banking industry, particularly around asset-backed finance.

However, the challenger bank is confident its diversified and “quite conservative” loan book of small loans will be able to weather economic uncertainty with the “febrile environment” of Brexit negotiations.

“Until there is some clarity about what Brexit means you do have to be slightly wary,” he added.

Read more: This bank saw deposits go up by more than 800 per cent

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