Infra Bank in Focus

Reflecting on our Annual Report and Accounts for 2022-23

26 October 2023

By Annie Ropar, Chief Financial Officer

As the Bank publishes its Annual Report and Accounts for year-end March 2023, Chief Financial Officer (CFO) Annie Ropar takes a moment to reflect on the story behind the numbers.

It has been a little more than 13 months since I joined UK Infrastructure Bank and it has been an exceptional time of growth for the organisation. I am proud to be part of a great team committed to delivering on our mandate of investing in projects which support the transition to net zero and local and regional economic growth.

Today we publish our Annual Report and Accounts for the fiscal year ending March 2023. I am pleased to report that we completed eight new transactions during that fiscal year, representing £1.1 bn in commitments and spanning the clean energy, digital and water sectors. All achieved whilst continuing to build the investment and support functions of the bank.

Our pipeline of deals continues to grow at a rapid pace now that our full origination team is in place. Since the end of March, we have completed additional investments totalling just under half a billion pounds, across a range of sectors, including natural capital, clean energy, transport and digital.

Cumulatively, the Bank has made investments of nearly £2bn, with more than £9.6bn of private finance mobilised, supporting 5,700 jobs.

So, you may be wondering, why is the bank reporting an after-tax loss of almost £6m, when in the prior year it earned a profit of £104m?

Firstly, it is important to note that as the bank adds loan assets to its balance sheet, upon commitment we need to record an estimate for expected credit losses. These estimates for losses are just that: estimates. They do not use cash, but they are a prudent measure to ensure we have a reserve for any future issues. This has a significant impact in the early years of a financial institution, when the portfolio isn’t large enough to generate sufficient income to absorb these estimates, our operating costs, and a return.

Our operating cost base is largely people. Not just people to originate and evaluate, but also people to protect, manage, and measure the investments throughout their lifecycle, all working hard to make sure those estimates for losses don’t materialise. Yet, we are continuing to evolve and leverage new technology to ensure our operations remain lean, agile and most importantly, effective.

Secondly, the profit generated last year was due to the Bank being the beneficiary of a substantial gain from the realisation of an investment in one of our more mature equity funds. This was what drove our reporting of an unexpected profit for 2021/22.

Where we are now is what we expected, and what is typical for a financial institution at this early stage of its development. We will deliver a more consistent, positive return over time, giving value for the taxpayer. We are building an enduring institution and move forward with confidence as we close the gap with every transaction we complete.

On behalf of UKIB, thank you, to our colleagues for their great contributions to our success to-date, and many thanks to our colleagues at HM Treasury (our shareholder) and UK Government Investments (UKGI) for their continued support. We look forward to continuing to deliver value for the taxpayer.