The group absorbed costs of £1.1m associated with acquisitions and its application for a banking licence for Recognise.

The loss before tax is down on the £1.2m loss reported in 2017. 

In a statement, Colin Wagman, chairman of the City of London Group, cited the acquisitions of Milton Homes Limited and Echo Financial Services Limited (now branded as Recognise).

He said that Recognise had been formed to provide financial services to the UK’s SME business market, subject to the successful granting of a banking licence from the regulator.

“The growth of the banking sector has accelerated over the last decade and it continues to evolve.

“The large and well-established banks have – in recent years – moved away from small business relationship management and the experience of personal touch and understanding.  

“By contrast, the challenger banks – in all their various forms – have seized the opportunity and finally gained the traction they needed to fill this void.

“Recognise has validated this approach through primary external market research of SME owners and the important commercial broker network.”

Colin said that a typical lending customer for Recognise would be an established business with at least two years profitable trading, while on the deposits side – subject to regulatory approval – it would be targeting retail and business deposits with amounts up to £85,000. 

“Should the business be awarded a banking licence, we believe Recognise will be strongly placed to succeed based on a combination of factors which, together, will create a robust platform for future growth and profitability.”

Michael Goldstein, CEO at the City of London Group, added that it was pleased with the positive progress it had made across the business over the past year.

“COLG is making good progress implementing its strategy of focusing on the UK SME market and on home reversions. 

“We have set up Recognise, which is progressing its application for a UK banking licence, and – if successful – will focus on providing services to the UK small- and medium-sized business market.

“Meanwhile, Milton Homes has continued to produce a steady number of property reversions, which is encouraging. 

“Looking forward, we are well placed to deliver on our strategic objectives and deliver value for our shareholders."