UK challenger banks punched above their weight in terms of credit and deposit growth in 2015. While deposits and loans shrank at most large UK banks last year, they soared at the challenger banks.
The largest increase in both loans and deposits came from Metro Bank, established with just four branches in 2010. The bank showed a 122% growth in loans to £3.55bn, and 78% growth in deposits to £5.11bn. Metro Bank has been expanding rapidly every year since its creation, although growth did not come without a price; so far it has posted a loss every year.
Other notable performances came from Shawbrook and Aldermore, both of which were created after the financial crisis. These two institutions grew their loans by 45.27% to £3.2bn and 27.99% to £6.14bn respectively in 2015, and their deposits by 31.62% to £3.19bn and 28.77% to £5.74bn.
Other than their status as challengers, these banks are characterised by their small size. Total assets at Metro Bank were £6.15bn in 2015, while Shawbrook and Aldermore had balance sheets of £4bn and £7bn respectively.
The larger challengers did not grow as quickly – the largest bank in the group, TSB Bank (total assets of £31.62bn) posted a 22.61% (£26.8bn) growth in credit last year, while deposit growth lagged behind at 5.25% (to £25.92bn). Loan growth was slower at the slightly smaller Virgin Money group, where loans increased by 16.66% (£27.55bn) in 2015 and deposits by 12.52% (£25.17bn).
However, this performance was still much better than at the largest UK banks. The four biggest lenders in the country – HSBC, Barclays, RBS and Lloyds – all saw their loans and deposits dwindle during 2015, with the largest decrease posted by RBS at 8.35% (down to £306.33bn) that year and deposits by 5.45% (down to £370.3bn). These figures refer to global RBS operations since the bank does not offer regional breakdowns of its assets and liabilities.
Only Santander UK, which is the smallest bank of the larger banks, managed to post growth in 2015: a 4.96% increase in total loans (to £198.05bn) and 6.81% increase in deposits (to £164.08bn).
