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Shawbrook hikes profits and sets out confident loan targets

Thu, 05th May 2016 08:31

(ShareCast News) - Shawbrook Group grew profits 29% in the first quarter and, despite a small squeeze on net interest margins (NIM) from higher property lending in the period, stated its confidence in hitting full year targets.The challenger bank said its business pipelines remained healthy, even allowing for the current political and economic uncertainty, and management said they were confident of maintaining the return on tangible equity (ROTE) at around 23% for the full year and, as part of new guidance provided on longer-term strategic plans through to 2020, added that they expect this metric will remain in the 22-25% range over the medium term.Chief executive Steve Pateman also announced the bank's new target is to grow the loan book to around £8.5bn by 2020, compared to £3.6bn at the end of last year, implying a compound annual growth rate of 19% over the next five years.As for the first quarter, Shawbrook started the year strongly, producing underlying profit before tax of £22.3m in the three months to 31 March, up 29% compared to the same quarter last year.This was driven by increased loan origination volumes of £475m and continued operational leverage, though the benefit from increased buy-to-let lending ahead of the April's stamp duty increase is expected to moderate over the remainder of the year.These stronger mortgage flows and the impact of the property acquisition completed in December combined to create a negative mix impact on NIM, which is the measure of a bank's profit margin being the difference between amounts paid on deposits and charged on loans.The balance sheet was largely stable, with the core tier 1 (CET1) ratio reduced by 1.0 percentage points to 13.4%.Analyst Gary Greenwood at Shore Capital assumed the CET1 was down primarily due to risk-weighted asset inflation associated with growth in the business."Operational risk weightings in particular needs to reflect forward looking growth plans," he added. "Nevertheless, this remains above the group's minimum target requirement of 12% and, combined with the strong return in equity, means that Shawbrook is well positioned to fund its loan growth ambitions, in our view. The leverage ratio of 8.1% remains very strong, in our view."Greenwood said that while he may need to tweak his income statement model to reflect the lower margin guidance, he expects this to be offset by the benefit of operating leverage, meaning bottom line profit forecasts should be largely unchanged.Likely due to the lower NIM guidance, shares in Shawbrook were down 2.7% to 284p just before 0930 BST on Thursday.

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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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