Shawbrook 99 Regulatory News (PH56)

Shawbrook Group plc - Q1 2023 Trading Update

London, 17 May 2023 - Shawbrook Group plc ('the Group') today issues its trading update for the three months ended 31 March 2023 ('Q1 2023').

Highlights

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Strong financial and operational performance maintained throughout the first quarter, alongside continued investment in digitalisation.

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Loan book grew to £11.2 billion (31 December 2022: £10.5 billion), driven by continued strength in loan origination across our Real Estate and SME markets.

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Maintained a well-capitalised and liquid balance sheet:

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Strong funding position retained with our retail deposit book growing at an annualised rate of 9% to £11.2 billion (31 December 2022: £10.9 billion), supported by healthy levels of liquidity, with a liquidity coverage ratio of 263.7% (31 December 2022: 321.3%).

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Continued to optimise our capital resources, with a Common Equity Tier 1 ratio of 12.8% (31 December 2022: 12.8%), a total capital ratio of 15.6% (31 December 2022: 15.8%) and a leverage ratio of 8.8% (31 December 2022: 8.8%).

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Consistent delivery of attractive returns, with a strong return on tangible equity of 22.0%1 for the three months ended 31 March 2023 (31 December 2022: 20.1%).

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We continue to closely monitor the changing economic environment and, while the outlook remains uncertain, we are not seeing any signs of widespread credit stress across the loan book, with the Group's overall arrears rate remaining stable at 1.9%2 (31 December 2022: 1.9%).

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Further investment in digital and data to enhance our customer journeys and robust risk management capabilities:

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Advanced our 'next generation underwriting' project in our Real Estate business with the launch of 'Colleague Hub' in April 2023. This new data-driven platform will help to reduce manual processing across our underwriting journeys, enabling faster completion times for our digital buy-to-let customers.

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Expanded the use of our automated decisioning capabilities to a wider group of our broker partners, allowing more of our digital SME lending customers to benefit from simpler and faster decision journeys.

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Piloted the launch of our new end-to-end digital savings journey, intended to increase self-service capabilities, maximise automation and deliver excellent experiences.

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

Marcelino Castrillo, Chief Executive Officer said:

"The excellent performance we delivered during 2022 extended into the first quarter of 2023, as we continued to build on our established track record of sustainable growth and strong profitability, underpinned by proven scalability, a diversified portfolio and robust risk management. While growing our loan book, we have maintained disciplined underwriting standards, conscious of the increasing affordability pressures on parts of the economy.

Our loan book grew to £11.2 billion, driven by strong demand across our specialist real estate and SME markets, and our new business pipeline is strong. Our growth continued to be primarily funded by our robust savings proposition, with customer deposits increasing to £11.2 billion.

Our 'best of both' model, combining great technology with human ingenuity, continued to make an impact across our markets. We made further investments in digital and data to enhance our customer journeys, including the launch of a new data-driven platform in our Real Estate franchise to help revolutionise the Shawbrook underwriting experience and the continued roll-out of auto decisioning capabilities to our SME customers. In our Consumer Franchise, we piloted the launch of our new digital savings journey which, once live, will help to deliver excellent experiences to our customers through increased self-service and automation capabilities.

While the macroeconomic backdrop continues to show signs of volatility, the proven flexibility of our business model combined with our strong capital and liquidity base means we can adapt quickly to challenges and opportunities as they may present themselves while delivering on our purpose to power up ingenuity, to create opportunity every day."

1.

Profit after tax (adjusted to deduct distributions made to holders of capital securities), divided by, average tangible equity. Average tangible equity is calculated as, total equity less capital securities and intangible assets at the beginning of the period (31 December 2022), plus total equity less capital securities and intangible assets at the end of the period (31 March 2023), divided by two.

2.

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