Interim Management Statement – Q3 2016
Shawbrook Group plc – continued growth with customer loans exceeding £4bn and generating strong risk adjusted returns.
Shawbrook Group issues its Interim Management Statement relating to the nine months from 1 January 2016 to 30 September 2016 (Q3 2016 YTD).
Steve Pateman, CEO said:
“The momentum of the first half of 2016 continued into the third quarter with the group exceeding £4bn of customer loans and achieving sustained growth at strong and disciplined risk adjusted margins, maintaining stability in NIM and achieving a cost of risk and cost to income in line with management’s expectations. Gross originations for the nine months to 30 September 2016 were £1.5bn, an increase of 23% compared with the same period in 2015, with Brexit-related uncertainties in the economy having a minimal impact on our business to date.
“We continue to make good progress in each of our divisions: the property finance division has achieved record levels of originations in Q3 despite the usual slowdown in the property market during August; we are continuing to invest in the roll out of our regional business centres in the business finance division and expect a number of our centres to be operational by the end of 2016; and our consumer division continues to widen its distribution channel with the announcement of a new partnership with Saga plc.
“Overall, the group continues to deliver sustained growth within its disciplined credit quality and returns metrics. Whilst we remain cognisant of the uncertainty which lies ahead as the UK begins the process of leaving the EU, we remain confident that we will continue to deliver on our strategic goals.
“One of Shawbrook’s strengths is its diversity across many specialist segments. There is considerable potential to grow in our core markets with new products which allow us to meet the needs of businesses and individuals which are becoming less well served by the mainstream banks.”
Key highlights:
· Stable NIM at 5.6% with continued tailwinds expected from deposit book repricing following the Bank of England base rate cut in August 2016.
· Continued operational leverage as the group grows with underwriting remaining robust and disciplined.
· The Q3 2016 YTD cost of risk, excluding the controls breach announced on 28 June 2016, remains significantly lower than anticipated through cycle loss rates supported by continued strengthening of controls and risk frameworks.
· Organic originations up 23% in Q3 2016 YTD to £1.5bn (Q3 2015 YTD: £1.2bn).
· Net loans and advances to customers increased 19%, exceeding £4bn at 30 September 2016 from £3.4bn at 31 December 2015.
· Continued implementation of the stated strategy across all divisions:
· Property finance: continued progression of Shawbrook’s presence in the development finance market through phased growth.
· Property finance: continued development of the lending into retirement product set with launch expected in Q1 2017.
· Business finance: significant developments in expanding the distribution capabilities as the regional business centres are rolled out with a number of centres expected to be operational by the end of 2016.
· Consumer: announcement of a partnership deal with Saga plc to explore the provision of additional financial solutions for life after 50.
· Consumer: successful launch of the direct to consumer platform for personal loans enabling the group to progressively increase origination.