Shawbrook 99 Regulatory News (PH56)

Shawbrook Group plc - Q3 2023 Trading Update

London 9 November 2023 - Shawbrook Group plc ('Shawbrook' or the 'Group') today issues its trading update for the nine months ended 30 September 2023 ('Q3 2023').

Performance highlights:

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Consistent delivery of attractive returns, achieving underlying return on tangible equity of 21.4%1 for the nine months ended 30 September 2023 (31 December 2022: 20.1%).

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Loan book grew to £12.6 billion2 (31 December 2022: £10.5 billion), driven by robust net lending volumes across our specialist markets.

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Further diversified our funding base, with our deposit book growing at an annualised rate of 30% to £13.4 billion (31 December 2022: £10.9 billion), and maintained healthy levels of liquidity, with a liquidity coverage ratio of 376.6% (31 December 2022: 321.3%).

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Strong capital adequacy and leverage maintained, with a Common Equity Tier 1 (CET1) ratio of 12.6% (31 December 2022: 12.7%3), a total capital ratio of 15.1% (31 December 2022: 15.6%3) and a leverage ratio of 8.0% (31 December 2022: 8.8%).

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Supported by our robust underwriting criteria, our overall credit quality remains strong and we are not seeing systemic signs of stress across our loan book. However, as customers begin to adjust to the higher rate environment, our overall arrears rate has increased to 2.2%4 (31 December 2022: 1.9%). We remain alert to the potential challenges that lie ahead given the uncertain macroeconomic environment.

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Announced a new partnership with specialist hire-purchase lender, Blue Motor Finance Limited (BMFL). The committed Platform Lending facility will provide a stable, flexible and simple source of capital to BMFL, enabling the delivery of a digital-first motor finance proposition to an underserved segment of the UK market.

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Completed the successful issuance of a further £90 million of Tier 2 debt securities on 4 October 2023 and will be used to support our continued growth plans while optimising our capital stack, improving the pro-forma September 2023 total capital ratio from 15.1% to 16.2%.

Marcelino Castrillo, Chief Executive Officer, commented:

"We have delivered another excellent set of results this quarter. Robust new business flows and strong customer retention levels resulted in the growth of our loan book to £12.6 billion2. This strong demand, coupled with our disciplined approach to pricing, supported the generation of attractive returns, achieving an underlying return on tangible equity of 21.4%1.

The sustainable returns we continue to generate are enabling us to maintain significant investment in our 'best of both' digital and human business model, delivering brilliant experiences for more customers, while improving our operational leverage.

We were pleased to agree a new Platform Lending facility with specialist hire-purchase lender, Blue Motor Finance Limited, during the period. This new partnership opens up further opportunity for Shawbrook and reinforces our ability to deliver digital-first finance propositions to previously underserved segments of the UK market.

The overall credit quality of our loan book remains robust, supported by our low loan-to-value and high debt service coverage ratios and our proactive approach to portfolio monitoring. We remain alert to, and prepared for, the potential challenges that may lie ahead and will continue to support our customers with tailored solutions.

We continue to strengthen our capital position, having successfully issued £90 million of Tier 2 debt securities in October, which will help fuel our growth plans. The resilience of our model, combined with our strong capital and liquidity position and diversified loan book, give us the confidence to pursue our strategy."

Footnotes:

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 (30 September 2023), divided by two.

2.

Excluding the Bluestone Mortgages Limited acquisition, the loan book was £12.3 billion.

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.

4.

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

For investor enquiries, please contact:

Murray Long

Head of Investor Relations

murray.long@shawbrook.co.uk

For further information, please contact:

Joe Hughes

Teneo

shawbrook@teneo.com

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.