Tandem Bank reported a second consecutive year of profitability in 2023 as customers flocked to the challenger’s greener offering.
Underlying profit at the digital challenger increased five-fold, jumping to £17.2m in the 2023 financial year from only £3.6m last year.
This was largely driven by a big improvement in its net interest income, the difference between what banks receive and pay out in interest payments. Net interest income jumped 28 per cent, from £68.5m to £87.8m.
Many lenders have seen the benefit of higher interest rates, which currently stand at a post-financial crisis high of 5.25 per cent. Higher interest rates improve banks’ lending margins.
Tandem, which was launched back in 2014, also reported robust underlying growth during the year with deposits more than doubling for the second year in a year, to £3.6bn. The lender now has over 300,000 customers for the first time.
Lending also rose by 14 per cent in the year to £1.4bn, driven by Second Charge mortgages. These loans make up £682m of Tandem’s total lending, but the bank has also been expanding its green offering in both home loans and motor finance.
These loans are “designed to help homeowners and car buyers transition to a greener lower carbon lifestyle”. £168m worth of home improvement loans were originated in the year alongside £114m of motor finance loans.
Alex Mollart, chief executive of Tandem Bank, said: “Tandem’s strategy of becoming the UK’s greener, digital bank is working. We’re profitable for a second year running and delivering growth across deposits, lending and revenue – attracting more green-savvy consumers to the bank.”
“It’s great to see so many customers buying into our mission to help the transition to a lower carbon lifestyle – and save money along the way. We’ve seen big increases in customers trusting their hard-earned savings with Tandem, while helping to fund the green lending we offer to customers looking to switch to a greener lifestyle.”