Shawbrook's share price follows profits higher at the challenger bank, as small business lending and buy to let loans soar

Billy Bambrough
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2015 General Election - Housing
The strong buy to let market has pushed Shawbrook's first set of results after floating on the stock market higher (Source: Getty)

SHAWBROOK chief executive Steve Pateman has warned the bank is unlikely to see its buy to let loan book grow as quickly in 2016, amid concerns the market is getting out of control.

Earlier this year, Bank of England governor Mark Carney said recent developments in the booming buy to let mortgage market posed a risk to the economy and warranted “heightened scrutiny”.

Lending at the challenger bank grew 44 per cent to £3.36bn in 2015, driven by buy to let and small business lending.

“The buy to let loan book is probably not going to grow as quickly this year. We’re a conservative lender and when one particular market like buy to let grows at a higher rate than others that can cause problems,” Pateman told City A.M.

3 March 2016 @ 11:00amShawbrook Group (SHAW)

Shawbrook has reported that underlying pre-tax profit for the year to 31 December rose 63 per cent to £80.1m.

The bank is one of several so-called challengers to emerge since the 2008 financial crisis to meet the demand for small business lending that traditional banks pulled back from after the crash to meet tougher capital and regulatory requirements.

Small business lending is expected to continue to grow for Shawbrook, as appetite for the business has not returned to the banks.

“I don’t think the big banks are going to come back into small business lending,” Pateman added. “It doesn’t fit the big bank model well, but it fits Shawbrook perfectly.”

On Wednesday, Shawbrook rival Virgin Money posted a 53 per cent jump in full-year underlying pre-tax profit. Its chief executive Jayne-Anne Gadhia warned, however, that the outlook for banks has worsened over the past few months due to the changing bank levy, European regulations, and lower for longer central bank interest rates.

Shawbrook floated on the London Stock Market last year, entering the FTSE 250 index, having launched in 2011.

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