The Scottish National Investment Bank has seen its income rise by almost 80% over the last financial year, exceeding operating costs for the second year running.

The Bank’s latest annual report for 2024/25 shows an income of £34.5 million, compared to operating costs of £16.2 million, with chairman Willie Watt hailing a year of ‘continued progress’ for the development bank’s investment portfolio.

The figures show that the Bank’s portfolio grew to 42 businesses and projects up to 31 March this year, with £145 million committed and a further £324 million crowded in, well above its £181 million target.

Since launching in November 2020, the Bank has committed more than £785 million and crowded in £1.4 billion, meaning the Bank has leveraged its capital to raise this additional investment for Scottish ventures.

The report also shows a spike in research and development activity, with the Bank investing £94 million, up from £42 million in 2023, as well as a much higher supply chain spend, up from £108 million in 2023 to £277 million last year. 

One particular area of focus is impacting investing, with the report laying out the Bank’s efforts supporting Scotland’s transition to net zero, a core goal of the Scottish Government.

According to the report, to date, the Bank and its co-investors have committed £1.4 billion to net zero businesses and projects. These investments have included £20 million for aviation firm ZeroAvia to develop zero-emission engines and £6.7 million for Subsea Micropiles for offshore wind technology.

However, despite the progress, the Bank said that many of its investees are operating in a challenging economic environment, contributing to an unrealised loss of £77 million due to valuation changes within the portfolio.

The Bank said that, as Scotland’s development bank, it is mandated to take on more risk than commercial investors, and its patient capital approach means it holds investments for longer periods of time to support scale-up stage businesses. 

“Investment opportunities don’t come to us in a linear way, and we would never compromise our robust due diligence process to rush a deal through before the end of a financial year,” said the Bank’s CEO, Al Denholm.

“As a young development bank and an investor in higher risk, early-stage companies, it is not uncommon or unexpected to see significant variations in the estimated fair value of our portfolio.

 “We hold our investments over a longer term and would expect to see our valuation change and level off as our portfolio matures.”

While the Bank’s commitment and deployment figures for the year were both below targets, the report also marks the first time the Scottish Government has awarded greater flexibility to the institution’s annual investment budget.

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Added to that, the last financial year also saw the Bank’s subsidiary, Scottish Investments Ltd, secure phase one authorisation from the FCA, a set of permissions allowing it to arrange investment deals in support of the Bank’s objective to crowd in more private investment and third-party capital.

“This year marked our fourth full year of operations, and we have made continued progress in developing the Bank’s capabilities and investment portfolio against a challenging economic context,” said Watt.

“Ongoing market volatility has followed years of geopolitical and economic uncertainty, creating a challenging environment for growing businesses and investment. 

“In these difficult economic times, the role of a development bank is even more important. Our capital is playing an important part in helping companies scale when the wider market instability and continued cost of living pressures are hindering growth plans.”