British Commercial Bank re-profitted with £144 million pre-tax gains, marking a high turnover rate for state-owned economic development institutions in the UK after two consecutive years of losses.
The return on profitability is due to the bank’s portfolio increasing by 19% to £4.7 billion, driven by its high performance in equity and debt holdings. The bank lost £131 million in the previous fiscal year ended March 2024.
Founded in 2014 to support small and medium-sized enterprises (small and medium-sized enterprises) and improve access to funds, the bank now finds itself at the heart of the government’s latest industrial strategy. In June, ministers pledged £6.6 billion in new capital to increase the bank’s financial capacity to £25.6 billion as it prepares for a broader mandate to stimulate UK growth and productivity.
Headquartered in Sheffield, the British Commercial Bank is increasingly becoming a key leverage for government efforts to help British companies scale up domestically rather than overseas, especially given the growing charm of the U.S. capital market.
Over the past year, the bank has provided £6.8 billion in finance to smaller UK businesses, including:
• Banks directly deploy £1.2 billion
• Guaranteed £2.6 billion loan
• £3 billion of “crowded” private sector capital
The financing reached 24,000 first-time recipient businesses, and another 4,000 duplicate beneficiaries, highlighting its growing impact on the UK entrepreneur ecosystem.
Louis Taylor, former CEO of UK export financing, said the bank’s efforts are expected to generate 38,000 new jobs and a total value of £8 billion over the life of the delivered financing.
“Having an economic development bank with permanent capital and a consistent risk appetite is a strong and positive development in the UK,” Taylor said.
As part of the expanded remit, the bank will lead the UK Growth Fund, a new investment vehicle designed to free up institutional capital, including from UK pension funds, to support domestic venture capital.
This marks a major change in the strategy, with banks managing capital on behalf of pension plans for the first time. Early interest came from major players such as Aegon, Cushon and London Civ in Natwest, London Civ (Local Government Pension Plan).
The initiative is aligned with increasing political pressure to unleash UK pension wealth to boost local innovation and help high-growth companies rooted in the UK.
While President Trump’s escalating tariffs face wider financial markets, British Commercial Bank said its portfolio is not expected to be directly impacted due to its strong domestic focus and limited influence from the most affected sectors.
The bank’s long-term role now appears to be firmly embedded in the government’s economic growth agenda, with the credibility of institutions strengthened by its profit recovery and stability of private sector partnerships.
Taylor added: “We have made a significant reshaping of the organization in preparation for the expanded mandate and our long-term ambitions. The momentum is now our impact on a large scale.”
