Shawbrook Group (LON:SHAW) reported what management described as a year of “disciplined execution” in its first full-year results presentation since the company’s IPO and inclusion in the FTSE 250. Chief executive officer Marcelino Castrillo and chief financial officer Dylan Minto said the group delivered outcomes consistent with its medium-term guidance, citing strong returns, continued loan growth, stable credit performance, and further efficiency gains.
Full-year 2025 results and key metrics
Management reported a 16% increase in underlying profit before tax to £340.5 million, alongside an underlying return on tangible equity (RoTE) of 17.2%. Underlying basic earnings per share rose 16% year-over-year to 47 pence.
On profitability and efficiency, management highlighted a lower underlying cost-to-income ratio of 39%, down from 40.8% in 2024, and described operating leverage as increasingly structural. While underlying administrative expenses rose 7% year-over-year, Minto said the “core cost base” was essentially flat at £252.3 million (excluding acquisitions and employee-related exit costs), even as the loan book grew at a 16% organic rate.
Below the line, Minto said adjustments totaled about £68 million and were primarily related to IPO transaction costs, IFRS 2 share-based payment charges, and corporate activity costs. He characterized these as non-recurring and previously flagged through the IPO process.
Loan growth, segment performance, and risk-adjusted returns
Shawbrook emphasized the flexibility of its specialist lending model across four segments, and management repeatedly pointed to risk-adjusted performance rather than headline net interest margin (NIM). Minto presented a measure of risk-adjusted net operating income over risk-weighted assets, with the group weighted average at 5.5% and all four segments “in a relatively tight range” despite differing headline margins.
- Consumer Finance: 6.1%, up 268 basis points year-over-year, which management attributed to reallocating capital toward secured high-end motor finance following the full integration of JBR.
- SME: 4.8%, down 94 basis points year-over-year due to impairments tied to a pre-2022 Development Finance vintage. Excluding that cohort, management said SME returns would have been broadly stable.
- Retail Mortgage Brands: 7.0%, up 56 basis points, supported by two OTD trades that generated an approximately £35 million gain on sale.
- Real Estate: 5.2%, stable year-over-year.
Castrillo said the group operates across a “total addressable market” of about £300 billion, with around a 6% market share, which he said allows Shawbrook to be selective and avoid markets that do not meet return standards.
Credit performance and the Development Finance vintage
Credit performance remained consistent with Shawbrook’s long-term metrics, according to management. The group reported an underlying cost of risk of 47 basis points, in line with what Castrillo and Minto described as long-term experience (a 47 basis points median since 2013).
Stage three loan balances as a proportion of the total book fell to 3.4% from 3.7% at the end of 2024. Arrears were stable at 1.6% of the portfolio compared with 1.5% a year earlier.
The total loss allowance increased to £203.4 million, representing a 1.14% coverage ratio. Minto said the 2025 impairment charge included £25 million related to a pre-2022 Development Finance stage three vintage, now described as a limited portfolio of about £140 million in run-off and “isolated to a handful of cases,” provided for at a 26% coverage ratio. Excluding that vintage, he said the bank’s cost of risk would have been 32 basis points.
In response to analyst questions about the improvement in stage three balances, Castrillo said the reduction was largely driven by work on that specific Development Finance cohort, adding that vintages outside that group had performed according to plan.
Funding, capital position, and 2026 dividend commitment
On funding, deposit balances grew 16% year-over-year to £18.4 billion, with a loan-to-deposit ratio of 97%. Minto said 91% of the liability base is sourced from UK retail deposits, with approximately 96% of balances insured under the FSCS scheme. He also cited roughly 310,000 depositors, an average balance of £42,000, and an estimated ~4% share of the UK savings market.
Management said the stock cost of the deposit book fell from 4.24% to 3.88% by the end of December 2025, attributing performance to investments in technology, pricing agility, customer service levels, and multi-brand/multi-channel distribution. Shawbrook also repaid the remaining £0.8 billion of TFSME during 2025 and reported liquidity ratios of 147% for the liquidity coverage ratio and 125% for the net stable funding ratio. Minto said the bank does not carry fixed-rate exposure across its treasury and liquidity portfolios, describing that as a deliberate risk management choice.
Shawbrook ended 2025 with a CET1 ratio of 12.4%, within its medium-term target range of 12% to 13%. Minto said the closing ratio reflected, among other items, IPO-related capital raised to support acquisitions completed during the year. He cited £326 million, or 270 basis points, of surplus CET1 above the regulatory requirement of 9.7%, and a total capital ratio of 14.8%.
Looking ahead, management said Basel 3.1 is expected to increase risk-weighted assets by approximately £1 billion and reduce CET1 by about 90 basis points, which they described as manageable. Executives also said 2025’s underlying adjustments should “substantially fall away” in 2026, supporting cleaner capital generation.
On shareholder returns, Minto committed to a maiden ordinary dividend paid in respect of 2026 results (payable in 2027), with the intention of a progressive dividend policy thereafter. He also reiterated that surplus capital above the target CET1 range, if not deployed at appropriate return hurdles, could be returned to shareholders through buybacks and/or special dividends.
During Q&A, management declined to provide a specific dividend quantum but said the company was comfortable with market consensus expectations and expected to provide more guidance as the period progressed.
Strategy, technology investment, and M&A
Castrillo said Shawbrook’s strategy remains centered on sustaining high risk-adjusted returns through the cycle, with growth coming through organic expansion, market growth in specialist segments, and selective M&A. He said the group has completed 25 strategic transactions since 2011 and described M&A as an “option for further value accretion” rather than a dependency.
Management highlighted technology and data as central to the operating model, noting that about 18% of full-time employees are in digital roles. Castrillo said Shawbrook has invested around £320 million since 2017 in building its technology platform, and described the increasing use of AI to improve customer service response times, underwriting speed, and operational productivity—while emphasizing that lending decisions remain with humans and AI is used to augment judgment with controls around transparency and data quality.
On acquisitions, Castrillo said ThinCats provided strategic fit in SME lending, with funding and cost synergies. He stated that 90% of identified synergies have been realized by switching ThinCats’ wholesale funding to Shawbrook’s deposit funding model, and reiterated prior guidance that the acquisition is expected to be low double-digit EPS accretive over 2026 and 2027.
He also discussed Plater, a small acquisition completed in December, describing it as a roughly £20 million short-term SME lending book with an “AI native” platform and a small team of about 15 people. Castrillo said Shawbrook expects to bring the capability into the group to support parts of its digital SME business and improve underwriting workflows.
In its closing remarks, management said it remains alert to geopolitical volatility and its potential effects on the UK economy, but argued that Shawbrook’s diversification and ability to reallocate capital across segments provide an advantage in uncertain conditions. Executives said the group entered 2026 with momentum and maintained line of sight to its medium-term guidance, including low double-digit annual loan book growth through the cycle, anchored to risk-adjusted returns.
About Shawbrook Group (LON:SHAW)
Shawbrook Group plc is a lending and savings bank. The Company operates through four segments: Property Finance, Business Finance, Consumer Lending and Central. The Property Finance segment provides mortgages for investors, businesses and personal customers. It serves professional landlords and property traders in residential and commercial asset classes across long-term and shorter-term finance. The Business Finance segment includes propositions, such as the Regional Business Centers that provide finance solutions; Structured Finance proposition, which consists of lending to small and medium enterprise (SME) finance companies, and Specialist Sectors proposition, which consists of leasing and hire purchase finance solutions.
