Shawbrook 99 Regulatory News (PH56)

Shawbrook Group plc - Full year results for the 12 months to 31 December 2022

Record profitability against an uncertain macroeconomic backdrop

London, 30 March 2023 - Shawbrook Group plc today announces its full year results for the year ended 31 December 2022.

Our 2022 profitability and returns reflect the strength of our 'best of both' business model which combines modular technology with human expertise, underpinned by our strong and prudent capital and liquidity profile.

Key highlights 

●

Growth delivered through continued investment in our customer proposition

○

Loan book growth of 25%1 to £10.5bn (2021: £8.6bn), driven by our diverse offering and further expansion across our markets.

○

Strong originations, particularly in our core SME and Real Estate markets.

○

Scaled our digital capabilities through investments in technology, serving c.425,000 customers in 2022.

○

Deposits rose c.31% to £10.9bn (2021: £8.4bn) as our strong savings proposition continued to attract customers.

●

Record profitability with consistent superior returns

○

Profitability driven by net interest margin improvement, with underlying profit before tax increasing to £238.0m (2021: £197.2m).

○

Underlying return on tangible equity of 20.1% (2021: 20.1%), driven by continued scalability, operating leverage and our disciplined approach to pricing and returns.

●

Supplemented growth through strategic M&A

○

Announced an agreement, subject to regulatory approval, to acquire Bluestone Mortgages Limited, a specialist mortgage lender focused primarily on owner occupied mortgages.

●

Conservative capital management provides the foundation for future growth

○

Continued to optimise our capital resources with Common Equity Tier 1 capital ratio of 12.8% (2021: 12.7%) and total capital ratio of 15.8% (2021: 16.2%).

○

The liquidity coverage ratio remains prudently positioned at 321.3% (2021: 247.8%).

○

Careful and robust management of loan books remains a strategic priority and the Group's overall arrears rate2 remains relatively stable at 1.9% (2021: 1.7%).

●

Extending our positive impact

○

Partnered with education charity Future First, to support their work aimed at encouraging and enabling social mobility to give young people the opportunity to engage with relatable role models and broaden their career horizons.

○

Launched our 'Thrive' apprenticeship programme designed to help young talent from different backgrounds experience early career opportunities.

○

Published our inaugural Task Force on Climate-related Financial Disclosures (TCFD) report.

Visit shawbrook.co.uk/2022results to download the full Report

Marcelino Castrillo, Chief Executive Officer commented:

"2022 was an exceptionally good year for Shawbrook, not just in terms of what was delivered but the way in which it was achieved. As well as achieving a record £238.0 million underlying profit before tax, we delivered an underlying return on tangible equity of 20.1% and served over 425,000 customers, doing so against an uncertain macroeconomic backdrop.

Customers across all of our markets have a pressing funding need, often complex or time-sensitive and frequently both. They choose Shawbrook for our ability to understand their individual requirements and to deliver the right finance solution quickly and seamlessly. To do this consistently and at scale requires the combination of great technology and human ingenuity - the 'best of both'.

We continued to co-develop 'Vision', a digital portfolio monitoring tool now running within our Real Estate and SME portfolios, enabling us to generate deeper data-driven insights into credit performance. We also extended our MyShawbrook portal and its partner ecosystem to include bridging and commercial investment applications with integrated valuations, driving a vastly improved broker experience.

But, technology is only half of the equation at Shawbrook and, in 2022, we continued to focus on the

attraction and retention of exceptional talent. We also strengthened our employee value proposition,

introduced a number of support measures to help our people with the increased cost of living and

continued to embed our purpose and culture.

While the external landscape changed significantly over the course of 2022, the flexibility of our model continued to play to our advantage. We are well positioned for further sustainable growth across our diverse markets and remain alert to further inorganic opportunities.

I am reassured by the financial strength of our platform and the resilience of our model given the likelihood of continued market volatility. The success of 2022 allows us to look ahead with confidence in our ability to respond to the immediate needs of the customers we serve today and to commit to prudent investment in the long-term sustainable growth of Shawbrook."

Business highlights

Enterprise

The Group's Enterprise franchise serves UK real estate investors, homeowners and SMEs with a range of specialist lending products.

●

Increased automation and digitalisation of our core customer journeys helped us to establish a differentiated proposition in a competitive UK property market, demonstrated by our latest 83%3 (2021: 80%) broker satisfaction score.

●

Joined forces with PEXA, the fintech behind the world's first digital property exchange, to initiate the digitalisation of the completions process.

●

Further extended the roll out of our award-winning 'Vision' portfolio monitoring tool, developed in collaboration with FundingXchange, across our Real Estate and SME portfolios.

●

Continued to evolve our digital SME lending business, using automation and enhanced data analytics to simplify and speed up lending decisions, providing fast, flexible and risk-adjusted finance at scale.

●

Launched Open Banking technology across the franchise, leveraging application programme interface (API) enabled links into customers' live banking information, enabling faster, more targeted focus on the customers who really need it.

Consumer

The Group's Consumer franchise serves UK consumers and micro business owners with a range of lending and savings products.

●

Delivered enhanced customer support and faster response times, through transitioning our consumer lending servicing operation to a new servicing partner.

●

Launched our Open Banking backed product in partnership with ClearScore, offering a discounted rate to incentivise customers to share their data, enabling us to integrate Open Banking data into our consumer decisioning technology.

●

Made several improvements to our customer journeys to align with the Financial Conduct Authority's new Consumer Duty principles, ensuring our purpose-led culture and Risk Management Framework continued to encourage good consumer outcomes.

Savings

The Group provides a wide range of Personal and Business savings solutions, with competitive interest rates, including easy access, notice and fixed term accounts and fixed cash ISAs.

●

Focused efforts on the dynamic management of our retail deposit book, including the proactive handling of the back book, increasing our customer care and enhancing our digital capabilities to enable more customers to experience excellent customer journeys.

●

Deployed a major upgrade and cloud migration of our core savings system, allowing us to further automate key elements of customer fulfilment requests, improving the speed and effectiveness of the service we provide.

●

To optimise the Group's cost of funds, we continued to diversify our deposit mix by expanding our product range and digital marketplace presence.

The Mortgage Lender Limited (TML)

TML provides a range of buy-to-let and owner occupied mortgages, designed for customers with more complex income profiles, including self-employed, entrepreneurs and first-time buyers.

●

Continued to scale its 'real life lending' offering through a volatile rate environment impacting the UK mortgage market.

●

Enhanced its portfolio monitoring capabilities with the introduction of a wider suite of early warning indicators to proactively identify emerging risks.

●

Launched a dedicated intermediary members club 'Society'. Since launch, the club has increased engagement and collaboration with its intermediary partners, through a series of industry events and communications.

1.

Loan book growth of 22% from £8.6 billion at 31 December 2021 to £10.5 billion at 31 December 2022. When adjusted to add back the sale of a portfolio of loans from Real Estate that completed in January 2022, which had a carrying amount at the point of derecognition of £298.3 million, loan book growth is 25%.

2.

Loans that are equal to or greater than two payments in arrears (includes all term expired).

3.

Combined 2022 score as at 31 December 2022.

Visit shawbrook.co.uk/2022results to download the full Report

A copy of the Annual Report will be submitted to the National Storage Mechanism and will shortly be available for inspection at https://data.fca.org.uk/#/nsm/nationalstoragemechanism