Interim Report for the period ended 30 June 2023

Shawbrook Group PLC

10 August 2023

 

Shawbrook Group plc
Interim Results for the period ended 30 June 2023
London, 10 August 2023 - Shawbrook Group plc ('Shawbrook' or the 'Group') today announces its Interim Results for the six months ended 30 June 2023.
Financial highlights
•		Loan book grew to £11.9 billion1 as at 30 June 2023 (31 December 2022: £10.5 billion), driven by strong net lending volumes across Real Estate, SME and Residential Mortgage Brands.
•		Strong profitability maintained in the first half of 2023, achieving 34% growth in underlying profit before tax to £149.3 million compared to £111.4 million in H1 2022 (27% growth on a statutory basis from £106.4 million to £135.1 million). Underlying return on tangible equity was 20.5% compared to 19.6% for H1 2022 (18.4% on a statutory basis compared to 18.6% for H1 2022), supported by the diversification of our proposition.
•		We continue to remain alert to the potential challenges that lie ahead given the uncertain macroeconomic environment, however we are yet to see any material changes to our early warning indicators, with credit quality remaining strong and the number of customers in arrears remaining stable. The overall arrears rate as at 30 June 2023 was 1.9%2 (31 December 2022: 1.9%).
•		Further strengthened and diversified our funding base, with our deposit book growing by 22% on an annualised basis to £12.1 billion (31 December 2022: £10.9 billion) and our total savings customer base increasing by 16% to c.262,000 (31 December 2022: c.225,000).
•		Maintained strong surplus liquidity and capital resources, with a Common Equity Tier 1 (CET1) ratio of 12.2% (31 December 2022: 12.7%3), a total capital ratio of 14.8% (31 December 2022: 15.6%3) and a liquidity coverage ratio of 330.7% (31 December 2022: 321.3%), reflecting our liquid balance sheet.
Strategic highlights
•		Completed the acquisition of Bluestone Mortgages Limited (BML) in May 2023, helping us to deliver an even stronger proposition to homeowners across the UK.
•		Continued to invest in and strengthen our digital capabilities, deploying innovative solutions across the business to improve our customer propositions:
			⁰	Launched the Shawbrook 'Colleague Hub', a strategic platform currently used by our Real Estate business. Born out of our 'Next Generation Underwriting' project, the platform digitalises processes to help maximise our underwriters' productivity in making valuable lending decisions.
			⁰	Continued to build out our new digital savings experience. This introduces enhanced self-service functionality to our customers and automated processes for our colleagues, to create a more seamless and streamlined savings proposition.
			⁰	Further invested in our Digital SME Lending proposition, using our auto decisioning capabilities to offer an improved customer journey.
•		As an organisation that seeks to protect our customers and promote good outcomes, we continued to embed the Financial Conduct Authority's new Consumer Duty across the business.
•		Our employee engagement score improved to 84% (2022: 82%), demonstrating how our people are proud of our culture and brand.
•		Continued to extend our positive ESG impact:
			⁰	Progressed our climate roadmap with a focus on embedding our strategy across the Group. This includes integrating the use of a climate portal into credit underwriting teams.
			⁰	Extended our existing relationship with Saracens. This gives us the opportunity to further deepen our commitment to the Saracens Foundation and men's and women's rugby teams, as well as becoming the new principal partner of the Mavericks netball team from 2024.
Marcelino Castrillo, Chief Executive Officer, commented:
"The first half of the year has again demonstrated the benefits of our business model - differentiated by our 'best of both' approach and fuelled by resilient and diversified funding. We continued to expand our presence across a range of carefully selected specialist markets, contributing to the sustained growth of our loan book to £11.9 billion1 and delivering stable returns, with an underlying return on tangible equity of 20.5% (18.4% on a statutory basis). Expanding our brand presence in the deposit market, we successfully attracted 37,000 new savings customers, increasing our retail deposit base to £12.1 billion. We have grown our liquidity levels to maintain a healthy liquidity coverage ratio as we continue to fund our lending growth.
Continuing investment in our digital strategy enables us to scale-up our proposition and deliver operational leverage: our underlying cost to income ratio has reduced further to 36.6% (41.5% on a statutory basis). Data, technology and organisational design are also providing us with access to a growing number of early warning indicators, with insights enabling us to proactively address any potential issues or stress in the loan book. Notwithstanding the volatile macroeconomic environment, our portfolios remain resilient, with the Group's overall arrears rate remaining stable at 1.9%2, supported by low loan-to-value levels and prudent risk appetite.
The resilience and agility of the model we have created at Shawbrook gives us the confidence to continue investing in our brand, people and the propositions we offer across a diverse range of markets. The sustainable returns we generate also enable us to further scale-up our model through ongoing investment in data and technology. Our 'best of both' approach creates opportunities in the current volatile macroeconomic environment." Footnotes
1	Excluding the Bluestone Mortgages Limited acquisition, the loan book was £11.6 billion.
2	Loans that are equal to or greater than two payments in arrears (includes all term expired).
3	Risk-weighted assets as at 31 December 2022 have been restated to reflect adjustments in credit valuation adjustment and counterparty credit risk in respect of the Group's structured entities' interest rate swap derivatives. Risk-weighted assets have increased by £80.6 million to £7,463.1 million and the capital and leverage ratios have also been restated to reflect these adjustments.
Visit https://www.shawbrook.co.uk/investors/ to download the full Interim Financial Report.

For further information, please contact:

Joe Hughes

Teneo

[e-mail]

For investor enquiries, please contact:

Murray Long

Head of Investor Relations

[e-mail]

About Shawbrook - Banking for the real world

Shawbrook is designed to accommodate individuality, diversity and the dynamics of the modern world. We are driven by our purpose, to power up ingenuity to create opportunity, every single day.

Leveraging strong digital capabilities to complement deep human expertise, our 'best of both' proposition is ideally placed to provide personalised finance solutions to those with immediate and often complex needs. We offer a diversified range of practical lending and savings products across three customer franchises to serve consumers, businesses and real estate professionals.

Our advanced digital platform enables us to provide a differentiated proposition to an expanding customer base. Our multi-channel distribution and end-to-end digital capabilities are empowered by our expert talent and partnerships with a range of leading FinTech and data providers to deliver best-in-class customer experiences.

The Group's lending activities are primarily funded by a stable retail deposit book consisting of easy access and ISA accounts, variable rate notice accounts and fixed rate fixed term accounts (mostly one - five years). Shawbrook Bank Limited is an operating entity of Shawbrook Group plc. Shawbrook Bank Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority and is a member of the Financial Services Compensation Scheme.

 

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