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Shawbrook’s impaired property loans soar as book grows

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  • 20/04/2020
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Shawbrook’s impaired property loans soar as book grows
Shawbrook Bank’s gross lending across its property finance, consumer and business lending was £5.5m in 2019, up from £2.3m in 2018, according to its full year results.

 

The value of credit impaired loans, however, rose by almost £30m year-on-year – a 50 per cent increase.

Stage three credit impaired property finance loans were valued at £89m, up from £60.6m in 2018.

Loans are categorised as stage one, two or three depending on their credit risk and can move between the stages as the risk improves or worsens.

Stage three is the highest level of credit risk and applies to loans where there is evidence that the borrower is struggling to make a payment or has defaulted.

A third of the impaired loans fell into the 71 to 90 per cent loan to value (LTV) bracket.

 

Higher impairment risk

In the report, the group warns that the “potential for additional credit impairment has increased with the outlook for the UK economy given recent forecasts and the potential impact of the coronavirus pandemic”.

The size of the bank’s property finance loan book grew by 20 per cent to £4.4bn.

The lender increased profit before tax by 11 per cent during the period to £122.4m.

Shawbrook’s savings business received £6.1bn in customer deposits, boosted by the launch of its digital SME deposit range in November 2019.

Its Common Equity Tier 1 and total capital ratio stood at 12 per cent and 16.4 per cent respectively.

Ian Cowie, chief executive, said: “We are reporting another strong and progressive set of results, further endorsing our continued emphasis on the specialist segments we serve.

“An increased focus on our core propositions has helped drive strong lending volumes with our loan book increasing by 15 per cent, or £0.9bn, to £6.8bn.

“This growth was particularly evident across our property finance and business finance divisions, where loan balances increased to £4.4bn and £1.7bn respectively.”

He added: “As this report describes, we have made significant progress over the last year and I am confident that our ongoing investment plan is leading to improvements for customers whilst creating long-term sustainability and value for our business.

“I believe we are uniquely placed to lead the market as the specialist SME lender of choice.”

 

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