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Shawbrook beats forecasts and plays down BTL worries

Thu, 03rd Mar 2016 11:50

(ShareCast News) - Shawbrook Bank's first final results since its flotation last April showed underlying profits ahead of forecasts and confidence brimming for the years ahead.The 'challenger' bank, which was formed when the former RBS Equity Finance acquired the banking licence of Manchester-based Whiteaway Laidlaw in 2011, increased its loan book 44% to £3.36bn in the calendar year.Having acquired providers of mortgages, secured loans, asset finance and asset- based lending in the run up to listing, Shawbrook launched an ISA product launch in the first half of last year and a full market instant access account in December.This growth in the loan book, plus net interest margin creeping up to 6.2% from 6.1%, helped grow profits before tax 63% to £80.1m, with earnings per share up 77% at 26.9p. Consensus forecasts had pointed to PBT of £78m.The group reported an improved cost of risk at 24 basis points, from 36bps a year ago, and cost-to-income of 48.3% was a continued improvement, on track to be below the 40% target by 2017."2015 was a significant year for Shawbrook," said chief executive Steve Pateman. "We achieved a successful IPO and continued to grow our core businesses, underpinned by a strong well-capitalised balance sheet which will support our ambitions for the near and medium term.On the outlook, he said Shawbrook has "invested for the future and, notwithstanding a softer economic outlook, remain confident that we will continue to generate strong through the cycle returns consistent with our stated strategy".Capital ratios were strengthened by the IPO, with a CET1 ratio of 14.4% at year-end versus 11.6% a year before, with total capital further strengthened by a £75m issuance in October that saw it enter 2016 with a total capital ratio of 18.0%.Addressing worries about the buy-to-let sector, the company said it operated "to a more conservative risk appetite than many in the market, for example LTV, interest rate stress and in addition we have the advantage of being less exposed to buy-to-let than our peers and we are strongly capitalised".Analysts at Peel Hunt, which recently selected Shawbrook as its preferred pick in the specialist lending banking segment, said it continued to forecasts 2016 PBT and EPS of £98.1m and 29.4p before meeting management.Shore Capital said it expected to upgrade its forecasts and continue to believe that the valuation of the specialist lenders sub-sector is wrong, with Shawbrook being valued at 10 times earnings with 20% EPS growth forecast."We see that Shawbrook is being only modestly impacted by the buy-to-let budget changes. We remain concerned that current banking returns are exceptional with substantially less impairment than at the peak of the economic cycle."Competition remains muted but is picking up and margins are exceptionally high. Consequently, the current ROE being achieved by the new and specialist lenders is not sustainable in the long term.""While we are cautious about long term returns, we believe that this year and next year's volume growth will remain very strong at margins that are expected to deliver a very substantial economic profit for shareholders. We believe that it is too early to call the top of the cycle and the market is wrong in pricing in a substantial recession."

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16 Feb 2017 09:53

Panmure initiates coverage of challenger banks

(ShareCast News) - Panmure Gordon initiated coverage on several challenger banks on Thursday, highlighting a preference for specialist lenders as they have avoided direct competition with large UK banks and offer high growth and returns at attractive valuations. The brokerage started Aldermore, OneS

16 Feb 2017 08:41

LONDON MARKET OPEN: Airlines Up As Cobham Suffers From Profit Warning

7 Feb 2017 11:09

Shawbrook appoints Dylan Minto as CFO

(ShareCast News) - Challenger bank Shawbrook Group has appointed Dylan Minto as chief financial officer and executive director with effect from 6 February. The specialist lending and savings bank said Minto's appointment follows an extensive market search for the best candidate following the departu

21 Dec 2016 09:25

BROKER RATINGS SUMMARY: RBC Upgrades Shawbrook To Sector Perform

21 Dec 2016 07:39

RBC Capital ups Shawbrook to 'sector perform', lifts EPS estimates

(ShareCast News) - RBC Capital Markets upgraded challenger bank Shawbrook to 'sector perform' from 'underperform' and lifted the price target to 280p from 210p as it upped its earnings forecasts. The bank noted the stock is off 26% this year versus the sector average off 2%. In addition, it pointed

13 Dec 2016 10:09

Liberum initiates coverage of challenger banks, prefers OneSavings

(ShareCast News) - Liberum initiated coverage of five challenger banks with three 'buy' recommendations and two 'hold' stances. The brokerage started OneSavings Bank, Shawbrook and Aldermore at 'buy' with price targets of 395p, 290p and 245p, respectively. It said OneSavings is making regulatory ch

14 Nov 2016 14:40

Sector movers: Banks lead gains as strategists raise US yield forecasts

(ShareCast News) - Shares in banks and life insurance outfits continued to pace gains as Treasury yields kept moving higher in the States on expectations for a fiscal spending boost under the new Administration, pulling interest rates across the globe up with them. For the most part, analysts app

14 Nov 2016 14:05

FTSE 250 movers: Greencore and banks gain while gold miners fall

(ShareCast News) - The FTSE 250 index was in positive territory, just shy of 17,500, by the late afternoon on Monday. Irish food company Greencore led the risers, gaining on the back of jump in full-year revenue and earnings, a hike in its dividend and the proposed acquisition of Peacock Foods for a

3 Nov 2016 17:55

CORRECT: LONDON MARKET CLOSE

3 Nov 2016 16:14

Director dealings: Shawbrook stand-in CFO likes what he sees

(ShareCast News) - Shawbrook Group's stand-in chief financial officer, Dylan Minto, snapped up shares in the challenger bank on Thursday after it posted a strong set of third quarter results. Minto, who was director of strategy before his temporary promotion, bought 15,000 shares at 237.74p and 5,00

3 Nov 2016 08:26

Shawbrook posts solid quarter with 'minimal' impact from Brexit

(ShareCast News) - Shawbrook Group issued its interim management statement for the nine months to 30 September on Thursday, reporting a stable net interest margin of 5.6%, with continued tailwinds expected from deposit book repricing following the Bank of England base rate cut in August 2016. The FT

26 Oct 2016 09:12

Banks' mortgage approvals rebound from low, BBA data shows

(ShareCast News) - Mortgage approvals from high street banks rebounded slightly in September, according to data from high street banks, after hitting a 19-month low in August. The British Bankers' Association (BBA) revealed mortgage approval numbers in September of 38,252, which was up from 37,241 i

25 Oct 2016 11:46

Credit Suisse sees rising risks for challengers banks Aldermore, Shawbrook

(ShareCast News) - OneSavings Bank received an upgrade but Aldermore and Shawbrook were downgraded by Credit Suisse as it warned the risks facing the UK's challenger banks were "becoming harder to ignore" heading into 2017. Following solid share price recoveries in recent months, the risk-reward for

25 Oct 2016 07:15

LONDON BRIEFING: Pound And Shares Firm Ahead Of UK Airport Decision

23 Sep 2016 08:34

RBC ups targets on specialty lenders due to UK economic resilience

(ShareCast News) - Analysts at RBC revised their price targets for UK challenger banks higher as a result of the resilience shown thus far by the economy and the support provided by the Bank of England. The broker also revised its forecasts higher for Aldermore,Close Brothers and Shawbrook. "While

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