Airdrie Savings Bank (ASB) has overcome the tough financial backdrop to increase its lending and deposits, though charges for bad debts have risen sharply.
The mutual, which was founded in 1835 and is governed by a board of trustees, said its “prudent” approach put it in a strong position to further increase lending in 2013.
Its annual report and accounts highlight a number of “challenges”, including a rising legal and regulatory cost burden, as well as low interest rates which have kept a lid on savers’ returns.
During 2012, total lending rose by 7.6 per cent to £52.2 million – the fourth consecutive year of growth. Customer deposits increased by 3.6 per cent to £142.5m.
The bank, which has several branches throughout Lanarkshire and one in Falkirk, acknowledged that the economic downturn had led to a “relative lack of reasonable and prudent lending opportunities”.
Bad debt provisions for 2012 leapt to £673,000 from £87,000 the year before.
Jim Armstrong, who was re-elected as president for a further year at the bank’s annual meeting this week, said: “For the past three years, we have continued to be affected by the same key issues – interest rates continuing at historically low levels, the economic climate and, of course, ongoing regulatory changes.
“In particular, increasing focus on compliance has involved considerable additional costs for ASB, including those borne by the bank in meeting its share of the liabilities for the financial services compensation scheme incurred by failures during the banking crisis of a number of institutions.”
The bank reported a profit before tax of £753,000 – up from £272,000 – as it booked a large gain from the sale of part of its gilt portfolio.
Reserves now stand at just over £16m compared with £15.3m at the same stage a year earlier.
Hailed at the height of the financial crisis as one of the strongest banks in the UK, the tiny ASB – whose headcount numbers 109 – has won a number of admirers.
The institution took a £10m deposit from a group of investors including Stagecoach co-founders Sir Brian Souter and his sister Ann Gloag, Kwik-Fit founder Sir Tom farmer, and investment banker Sir Angus Grossart.
The extra cash helped the bank expand lending and, for the first time, to move beyond the boundaries of Lanarkshire – to Falkirk, where the company opened a high street branch in 2011.
Rod Ashley, who took over as chief executive of ASB on 1 January from long-standing boss Jim Lindsay, added: “As we look to the future, ASB intends to maintain its traditionally cautious approach and stay true to its traditional banking values.”