Shawbrook growing its base

The news knocked the challenger bank's shares, which had made steady progress since its April listing. Neither could the chancellor's hand be stayed from chopping tax relief for the buy-to-let (BTL) market, although the impact of this on Shawbrook's BTL mortgage lending should be limited, as 45 per cent of the bank's customers own properties through limited companies, which are exempt from the tax rise.

The question for lenders is to what extent their fate is indeed within their hands. Cyclical demand for finance from small and medium-sized employers was a major driver of Shawbrook's growth in the first half. Loans to these companies, in the form of commercial mortgages, asset finance and invoice finance, grew by 17.5 per cent over the period to £2bn. The rise in consumer credit appetite also benefited its point-of-sale finance, which saw its net interest income rise to £10m, from £6.2m in the same period of 2014. Overall, underlying profits almost doubled to £34.8m.

One of the few levers that a bank can pull on is cost. Here, Shawbrook managed to reduce its cost-to-income ratio to 48.9 per cent at the end of June, from 52.6 per cent a year earlier.

Analysts at Numis expect pre-tax profits of £76m for the full year, giving EPS of 24p, up from £45m and 14p in 2014.