The British Business Bank has swung back into profit with a pre-tax gain of £144 million, marking a significant turnaround for the UK’s state-owned economic development institution after two consecutive years of losses.
The return to profitability comes as the bank’s investment portfolio increased by 19% to £4.7 billion, driven by stronger performance across its equity and debt holdings. In the previous financial year to March 2024, the bank had recorded a £131 million loss.
Set up in 2014 to support small and medium-sized enterprises (SMEs) and improve access to finance, the bank now finds itself at the heart of the government’s latest industrial strategy. In June, ministers committed £6.6 billion of new capital, increasing the bank’s financial capacity to £25.6 billion as it prepares for a wider mandate to stimulate UK growth and productivity.
Headquartered in Sheffield, the British Business Bank has increasingly become a key lever in the government’s push to help UK firms scale domestically rather than overseas, particularly in light of the increasing allure of US capital markets.
Over the past year, the bank supported £6.8 billion in finance to smaller UK businesses, including:
• £1.2 billion directly deployed by the bank
• £2.6 billion in lending underpinned by guarantees
• £3 billion in “crowded in” private sector capital
This financing reached 24,000 first-time recipient businesses and an additional 4,000 repeat beneficiaries, highlighting its growing influence on the UK’s entrepreneurial ecosystem.
Chief executive Louis Taylor, the former head of UK Export Finance, said the bank’s efforts are expected to generate 38,000 new jobs and £8 billion in gross value added over the lifespan of the financing delivered.
“Having an economic development bank with permanent capital and a consistent risk appetite is a powerful and positive development for the UK,” said Taylor, who received total remuneration of £460,800 last year.
As part of its expanded remit, the bank will lead the British Growth Fund, a new investment vehicle aiming to unlock institutional capital—including from UK pension funds—to back domestic venture capital.
It marks a significant shift in strategy, with the bank managing capital on behalf of pension schemes for the first time. Early interest has come from major players such as Aegon UK, NatWest’s Cushon, and London CIV, a pool of local government pension schemes.
This initiative aligns with growing political pressure to unlock UK pension wealth to boost homegrown innovation, and help high-growth companies remain rooted in Britain.
While broader financial markets have faced turbulence from President Trump’s escalating tariffs, the British Business Bank said it expects no direct impact on its portfolio due to its strong domestic focus and limited exposure to the most affected sectors.
The bank’s long-term role now appears firmly embedded in the government’s economic growth agenda, with institutional credibility bolstered by its return to profit and a growing stable of private sector partnerships.
Taylor added: “We’ve undertaken a significant reshaping of our organisation to prepare for this expanded mandate and our long-term ambitions. The momentum is now with us to deliver impact at scale.”
