Shawbrook Bank Publishes 2020 Half Year Report

Shawbrook Bank, the specialist UK savings and lending bank specialising in Bridging Finance, Development Finance and Buy To Let Finance, has released its half year financial results for the period ending 30 June 2020.

The bank announced it has set aside £45.8 million of provisions in preparation for potential future loan impairments as a result of COVID-19.

It also reported it had granted £15.9k payment holidays to support its customers through the COVID-19 crisis, of which 10.8k remained in force at 30 July 2020.

In consequence, Shawbrook’s profitability was impacted with a significant reduction in PBT by 89% to £5.9 million.

Despite the uncertain and challenging market conditions resulting from the pandemic, the bank retained its active position in the UK savings market, increasing its retail savings deposit base by 25% to £7.6 billion.

Shawbrook also reported a successful completion of a £75 million Tier 2 re-financing to further optimise its capital structure during the period.

Shawbrook Bank’s Chief Executive Officer, Ian Cowie, said that COVID-19 has had a clear impact on the bank’s financial performance, however Shawbrook remained in a steady position of strength.

He commented: “Prior to COVID-19, the Group had continued to make good financial progress, starting 2020 with a strong balance sheet and prudently positioned capital and liquidity base.

“To further optimise the Group’s capital structure, during H1 2020 we initiated a Tier 2 refinancing and, despite the challenging market conditions, successfully completed the £75 million issuance in July.

“We have also maintained our active position in the UK savings market. However, the longer-term economic impacts of the pandemic remain hard to predict and as a result we have recognised expected credit loss charges in the period on loans and advances to customers of £45.8 million and on loan commitments of £1.5 million.

“While this has clearly had an impact on profitability, our capital strength positions us well to support our customers and grow our business in line with appetite as we enter the second half of the year.”

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Throughout the COVID-19 crisis, Shawbrook maintained full operational functionality with 98% of employees transferred to remote working and no staff furloughed.

The bank implemented a series of concession opportunities across its product range to help reduce the financial impacts of COVID-19 on its customers.

Over this period, Shawbrook also successfully achieved accreditation to the UK Government’s Coronavirus Business Interruption Loan Scheme (CBILS) to provide additional funding assistance and support to its SME clients.

Mr Cowie added: “Since the outbreak of COVID-19, our focus has remained on supporting our staff, customers and partners while at the same time safeguarding the long-term sustainability of our business.

“When the UK lockdown was announced in March 2020, we acted with speed and agility, moving to an almost entirely remote operation within days. Led by a stable and experienced management team and with the support of new and existing technology, we have continued to operate effectively throughout this period.”

Throughout the first half of the year, the bank also continued to identify investment opportunities to further digitalise its proposition, with a core focus on its SME offering.

Mr. Cowie added: “Notwithstanding the pandemic, we have continued to invest in our business to help drive our strategic ambition to become the UK’s Specialist SME Lender of Choice. As well as the ongoing deployment of targeted digital solutions across the Property, Consumer lending and Savings businesses, our investment in the development of a new growth platform in our Business Finance franchise will serve to further modernise our offering, delivering an enhanced customer journey as well as significant operational efficiencies.”

Looking to the future he continued: “Although significant uncertainties regarding the broader macroeconomic impact and pace of recovery remain, we are cautiously optimistic in our outlook as we start to see signs of momentum returning to certain of our specialist sectors.

“Our management expertise and prudent approach to credit decisioning, combined with investment in our digital propositions, means we are well positioned to adapt and respond to opportunities as they arise throughout the second half of the year.”

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