Following in Virgin Money's footsteps, Shawbrook has today waved away the Brexit woes facing challenger banks by showing off a boost to its bottom line.
The challenger bank reported profits before tax for the first half of 2016 of £35.2m, up from £24.7m in the first half of 2015. Meanwhile, underlying profit before tax increased to £38m for 2016, up from £33.2m.
Net interest income also increased, rising to £92.8m from £69.9m on a reported basis and to £93.8m from £69.9m on an underlying basis.
Shares in the company are trading up 1.5 per cent at 178.06p at time of writing.
Why it's important
Investors seemed to lose faith in challenger banks shortly after the Brexit vote, as share prices took more of a plunge than many of the bigger names in the sector.
A report by the Bank of England warning that challenger banks were less shielded from downturns in the commercial property sector, shortly after many property funds had shut their doors to trading, did little to help improve matters.
But the tone was quite different from the banks themselves. A group of them, including Shawbrook, ganged together shortly after the referendum to write to the influential Treasury select committee to ask MPs to treat Brexit as a golden opportunity to cut some of the red tape that hindered competition in the sector.
What Shawbrook said
Chief executive Steve Pateman, however, did add some caveats:
Much remains to be resolved and this will undoubtedly influence consumer and business confidence as the future of our relationship with the EU becomes clearer – at present we are not seeing any material change in activity and indeed some markets that slowed in the run up to the Referendum have picked up.
However it is too soon to fully assess the medium term impacts on the broader economy given the number of outcomes that remain possible.
Pateman later told City A.M.: "You have to be alive to the fact that the economic picture is continuing to evolve which is why I think knee-jerk reactions are probably entirely the wrong thing to do…clearly, as you get into quarter four, a lot more things about how we're going to work with Europe going forward will either get resolved or unremain unresolved and actually the resolution of those issues will probably dictate consumer and business confidence as we come out of 2016 and into 2017."
Another challenger bank trades well through Brexit uncertainty.