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Digital challenger bank Oaknorth has announced its first-ever dividend after a significant increase in profit last year. The business-focused lender, which launched in 2015, informed investors last week that its board had approved a special dividend.
Reports suggest that the payout will amount to around $40 million (£31.3 million), although Oaknorth has not confirmed this figure.
The bank highlighted that its ability to issue its first capital return reflects the strength of its business and underlying profitability. In 2023, Oaknorth reported a 23% increase in pretax profit, reaching £187.3 million, up from £152.3 million in 2022. This growth was driven by a 22% expansion of its total loan book, which now stands at £3.8 billion.
Looking ahead, Oaknorth indicated that it might consider further capital returns, including dividends, based on various factors such as economic conditions, business performance, and growth opportunities.
Oaknorth specializes in lending to businesses with revenues ranging from £1 million to £100 million. The bank was valued at $2.8 billion in a 2019 funding round led by SoftBank’s Vision Fund and appointed former regulatory chief Lord Adair Turner as its chair in January.
The announcement of Oaknorth’s inaugural dividend comes as the bank considers entering the public markets. Co-founder and chief executive Rishi Khosla recently mentioned that while no decision has been made regarding an IPO, the UK appears less attractive compared to other markets. Oaknorth is also planning to expand by opening a representative office in the US and exploring M&A opportunities within the banking and fintech sectors there.
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