Ian Cowie

Shawbrook grows loan book by 5%, while profit before tax down 40%

Shawbrook Bank has reported a “resilient and robust” financial performance in the trading year ended 31st December 2020.

In 2020, the bank — which is celebrating its 10th anniversary this year — grew its loan book by 5% to £7.1bn, up from £6.8bn in 2019.

It saw most of the demand in its property and business finance divisions, which reached a total loan book of £4.9bn and £1.8bn, respectively. 

This was attributed to more entrepreneurs and SMEs seizing opportunities and strengthening balance sheets in the wake of the pandemic.

Shawbrook also made two acquisitions last year — RateSetter and The Mortgage Lender — which it said had significantly strengthened its position in those markets. 

It also stated it would continue to look for strategic opportunities to further deepen its core franchise.   

However, the bank reported a 40% reduction in profit before tax to £73.5m (2019: £122.4m), driven by a rise in impairment charges of £54.9m (2019: £29.9m) and increased liability provision relating to Consumer Credit Act claims where the supplier has become insolvent. 

In terms of its support for customers during Covid, the bank granted payment holidays on a total of £1.9bn of balances, with 91% either expired or resumed payments and not in arrears.

Shawbrook also saw a 13% rise in customer deposits to £6.9bn, compared to £6.1bn in 2019, which continued to support the growth of its lending volumes and maintain prudent and elevated levels of liquidity throughout the pandemic. 

Its operating income was steady at £398.2m (2019: £408.3m).

The bank’s gross asset yield reduced to 5.8% (2019: 6.4%), reflecting the product mix weighting, the disposal of a £100m higher-yielding consumer loan portfolio, and the impact of the Bank of England base rate reduction  on its variable rate loan book.

Ian Cowie, CEO at Shawbrook (pictured above) — and who will step down later in the year — said: “The pandemic has highlighted the operational and financial resilience of our business, which is underpinned by the simplicity of our model, our focus on core propositions and the tenacity of our people. 

“This has enabled us to support our customers and grow our franchise. 

“I believe the business is also in a strengthened position as a result, further driving us towards our strategic goal to become the UK’s specialist lender of choice.”

Ian will be replaced by Marcelino Castrillo, who was previously managing director of customer engagement and distribution at Natwest Group. 

Dylan Minto, chief finance officer at Shawbrook, added: “The pandemic brought Shawbrook’s reason for being into sharp focus — to provide access to finance for those customers whose needs aren’t being met by incumbent banks. 

“This was especially relevant during the pandemic as customers focused swiftly on either surviving or taking advantage to scale.

“Looking ahead, our strong presence in our chosen markets, reputation for outstanding customer support and further investment in technology-driven service make us ideally positioned to continue growing our lending and savings franchises, while helping to secure the UK’s economic recovery.”  

Shawbrook recently announced it is entering into a multi-year partnership with Championship rugby union side, Saracens.

The bank will support Saracens as its seeks to return to the Premiership.

As part of the sponsorship, Shawbrook will provide ongoing financial support to the Saracens Foundation, whose mission is to build stronger communities.

As the Club’s charitable arm, the foundation delivers a wide range of initiatives, all designed to use sport to bring about positive social change and improve the lives of local people, with a focus on those who often find themselves excluded from participation.

The partnership will see Shawbrook feature on all three of Saracens’ team kits and will have a significant presence at their stadiums.

In addition, a new Shawbrook Stats Centre portal will be available, designed to deliver additional value for fans and journalists alike by sharing key player information and stats across multiple platforms.  

Lucy Wray, CEO at Saracens, commented: “We are delighted to complete this new partnership with Shawbrook. 

“We both consistently strive to be the leaders in our respective fields, and we share a deep commitment to diversity and inclusivity. 

“Following the recent announcement of the StoneX partnership, this is another great milestone for the Saracens family as we look towards an exciting future.”

John Eastgate, managing director at Shawbrook’s property finance division, added: “There are many synergies between our business and Saracens which make this partnership so exciting. 

“We are both ambitious organisations, committed to thinking and acting differently and driving positive change in our industries and wider communities. 

“The Saracens Foundation does incredible work in support of its local community, and this resonated with us at Shawbrook. 

“The ability to support all three of the Saracens’ teams is another aspect of the partnership that we are particularly proud of. 

“Inclusion within sport is incredibly important, and its vital that organisations like ours commit to encourage and support diverse talent.”

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