HAMPDEN & Co, the Edinburgh-based private bank, has reported a huge rise in income and profit for the first half as it underlined growing demand for personalised banking services.

The bank, which caters for high-net-worth customers, recorded a 74% year-on-year rise in total income to £15.3 million for the six months to the end of June, boosted by high interest rates, strong client retention, and new client wins.

It came as Hampden & Co, which was the first bank of its kind to open in 30 years when it began trading in 2015, grew its customer base by 8% over the six months to more than 5,000. This was helped by a sharp rise in referrals from professional partners, the bank said. Year-on-year, since the first half of 2022, client numbers were up 13%.

READ MORE: Scotch whisky club reveals ambitions after US and EU breakthroughs

Hampden & Co was set up by former Ray Entwistle, a former chairman of Adam & Company, in 2013, and went on to secure its banking licence two years later.

Mr Entwistle recruited Graeme Hartop, a former colleague at Adam & Co and more recently managing director of Scottish Widows Bank, as chief executive, as the bank embarked on a strategy of providing a tailored services to well-heeled customers in Edinburgh and London.

Yesterday, the bank reported a pre-tax profit of £5m for the first half which followed a £600,000 loss at the same stage last year, though it went on to report a profit of £2m for 2022. That was the first time the bank had reported a full-year profit in its short history, following losses of £5.8m, £5.5m, £4.1m, and £3m in 2018, 2019, 2020, and 2021.

In what the bank said was a sign of continued demand for tailored banking solutions, Hampden said yesterday that its total lending increased by 6% year-on-year in the first half to £461m.

READ MORE: Scottish print veteran John Watson backs Glasgow venture

It highlighted that lending growth was particularly strong for the bank’s retirement mortgage, which allows people to raise funds against their principal property for a range of purposes, including estate planning in relation to inheritance tax liabilities. Retirement mortgages provided by the bank increased by 10% in the first half and were up 39% year-on-year.

Meanwhile, the bank said deposits had grown as clients continued to reallocate cash from current and call accounts into notice and term accounts to benefit from rising interest rates. Term deposits were up 44% year-on-year while notice deposits increased by 96%.

Asked to what extent rising interest rates had boosted income, a spokeperson told The Herald: "Deposits and lending have grown steadily since the bank launched and our client retention is extremely high. The rise in income is a result both of increases in interest rates on existing business and the growth in new business.

"We consider that interest rates are nearing their peak in this cycle, although the level and timing of this peak remain highly dependent on the trajectory of the UK’s inflation rate."

The spokesperson added: "Demand for personalised banking, at a time when other banks are closing branches or directing their clients online, has also led to an increase in the number of new clients."

Hampden, which now has 136 employees, strengthened its team in the first half with the hires of Patrick Preece and John Glanville as banking directors in the London office. Mark Plummer joined as its new head of private banking in the UK capital.

Mr Hartop said: The UK banking sector continues to experience change and we believe we are very well positioned to increase market share in the private banking sector as well as to meet the needs of underserved high-net-worth customers of high street banks.

READ MORE: Scotch whisky firm reveals major change

“It is particularly pleasing to see a high number of referrals from other professionals such as wealth managers, solicitors and accountants, as such partnerships are of significant benefit to our mutual clients.”

Hampden’s results for the first half follow a period during which banks have benefited steadily rising high interest rates.

It was announced last week that members of the Bank of England’s Monetary Policy Committee had voted at its latest meeting to increase the interest rate by quarter of a percentage point to 5.25%. It was the fourteenth time since December 2021 that the Bank had increased the interest rate as part of its strategy to combat surging inflation.

In recent weeks signs have been emerging that high interest rates are starting to weigh on mortgage markets and housebuilding activity, with Nationwide reporting last week that house prices fell by 3.8% in July – its sharpest decline since July 2009.

However, while the Bank of England has signalled its expectation that interest rates will remain higher for longer, hopes have arisen that mortgage rates may have peaked, after banks such as NatWest, Halifax, and Virgin Money cut rates last week.