Masthaven Annual Report 2019

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Chief Executive's Report

There are many positive results to present in this, the third annual report, for Masthaven Bank. However, the one that I would like to initially focus on is the investment by Varde Partners Inc (“Varde”) in April 2019. This is a milestone moment for me personally and for Masthaven. To have such a strong partner as Varde, with over $14 billion of assets under management positions Masthaven strongly for opportunities to grow and develop in the UK banking sector. I would like to welcome Varde as a new significant shareholder for Masthaven and look forward to working with the Varde team.

As part of preparing for the Varde investment the bank undertook a complete overhaul of its existing capital structure which was necessary to create a future proofed capital organisation. This was a very time-consuming exercise for the Bank’s shareholders, Board and senior management and also involved a moderation of the Bank’s lending activities in early 2019 whilst the re-organisation took place. The terms of the capital restructure stipulated that the existing MBL employee share option scheme was to be cancelled. At the point of cancellation, the Bank provided a clear statement of intent to those colleagues impacted would be awarded options in a new scheme. This is very important to me and the Board as we have always valued the share ownership provided to our employees.

Since the creation of Masthaven Bank we have been committed to meeting the real and individual needs of customers in our chosen lending and savings markets. This eschews the one-size-fits-all approach by giving customers a banking service they value, recognising that a modern bank has to embrace the diversity of both the customers it serves and the people that work in the business. It’s this very individual approach that means that Masthaven is very proud to have its own staff as the face of the Bank in its external communications and in portraying the message ‘Masthaven is the bank putting the personal back into finance’. We strongly believe banking is about more than just money. It’s about living up to your promises, understanding people’s needs and challenges, and bringing a personalised approach to helping them achieve their financial ambitions.

Whilst we embrace technology, one of the founding tenets of our philosophy is people; we like to treat people as  individuals – both our customers and our staff – choosing to see the human being behind applications. It is great therefore that 18% of our savings customers are using the flexible savings account, this allows savers, not their Bank, to choose when their account matures, and we’ve helped 4,311 borrowers with a range of diverse requirements through our flexible lending solutions.

Today different most definitely doesn’t mean risky; different just means human. It’s this ethos that helped the Bank to retain the award as the UK’s ‘Most Innovative Digital Retail Bank’ (Capital Finance International CFI.co). All of us at Masthaven continue to be excited by the opportunity we have to redefine modern banking for our lending customers, their intermediaries and our savings customers.

The Bank has delivered a solid performance in the year to April 2019 and has come a long way in a relatively short space of time, for instance the team have built a highly recommended business across the range of lending and savings solutions and for both retail and SME customers and I am delighted therefore that during the year to the end of April we had grown our numbers of customers to 21,122 (April 2018: 11,722).

However, there remains much for us to work on. For instance, the Bank has yet to achieve annual profitability and has a high cost to income ratio which reflects the Bank’s strategy of investing ahead of growth. With the uncertain macro-economic environment created by Brexit, the Bank will need to be measured in its growth in the coming year. However, by making the Bank fit for the long term I feel the Bank will be best positioned for the opportunities that will arise in the future.

Andrew Bloom
CEO & Founder