The British Business Bank (BBB), a state-owned lender that supports small and medium-sized enterprises (SMEs) in the UK, has announced a pre-tax loss of £147.3m for the year ending March 2023. This is a sharp decline from the previous year, when it made a profit of £604.8m.
Impact of Covid-19 and market fluctuations
The BBB attributed its loss to the adverse effects of the Covid-19 pandemic and the volatility of the market valuations of its investments. The bank said that the value of its equity investments fell by £146m, or 5%, due to the wider economic difficulties and the uncertainty caused by the health crisis.
The bank also said that it expected some fluctuations in its portfolio performance, given the long-term nature of its investments. It added that it was confident that its investments would generate profitable growth and social benefit for the UK economy in the future.
Record funding for SMEs
Despite the challenging economic environment, the BBB said that it delivered a record level of funding for SMEs in the UK. It made £1.6bn worth of funding agreements in the year, bringing its total funding to £12.4bn to more than 90,000 businesses since its launch in 2014.
The bank also administered the government’s three Covid-19 loan schemes and its Future Fund, which provided more than £80bn in finance to almost 1.7 million businesses. The schemes are now closed to new applications.
The BBB said that it supported businesses across all regions and sectors of the UK, with a focus on underrepresented groups and areas. For example, its Start Up Loans programme reached a milestone of £1bn in lending, with more than half of that going to businesses run by women and ethnic minorities.
Outlook for the future
The BBB said that it was optimistic about the prospects of the UK’s SME sector, as it showed resilience and innovation in the face of the pandemic. The bank said that it would continue to provide access to finance for SMEs, especially those that are high-growth, innovative, or socially or environmentally impactful.
The bank also said that it was preparing for the transition to a new regulatory framework, as it was designated as a development bank by the government in March 2023. The bank said that this would enable it to expand its activities and offer a wider range of products and services to SMEs.
The chief executive of the BBB, Louis Taylor, said: “We are proud of our achievements in supporting UK small businesses over the past year, despite the unprecedented challenges they have faced. We believe that our investments will generate a good return for the taxpayer and make a positive difference to the UK economy.”
