Shawbrook Group has reported a 16% rise in underlying profit before tax to £195.5 million for the six months ended 30 June 2026, up from £168.6 million in the same period a year earlier. The FTSE 250 specialist lender also confirmed it remains on track to pay its maiden ordinary dividend in 2027 in respect of FY 2026 earnings.

The loan book, including originate-to-distribute (OTD) assets, grew to £20.1 billion from £19.2 billion at the end of FY 2025, representing roughly 10% annualised growth. Underlying return on tangible equity came in at 18.1%, marginally below the 18.3% reported in H1 2025 but ahead of the c.17% full-year guidance. Net interest margin expanded to 4.38% from 4.35% year-on-year, even excluding a £25.8 million gain on the sale of retained notes from the Lanebrook 2024-1 securitisation.

Efficiency gains and AI deployment

The standout operational metric is the cost-to-income ratio, which fell to 36.4% from 40.0% a year earlier, putting Shawbrook well inside its medium-term guidance range of mid-30s. Chief executive Marcelino Castrillo attributed the improvement to deliberate choices across organisational design, estate footprint and the technology stack. He pointed to AI as an increasingly material contributor, with the bank deploying it across each stage of the lending cycle. In real estate underwriting specifically, Shawbrook said AI-assisted workflows are targeting a reduction in preparation time of up to 50%.

The cost-to-average-principal-employed efficiency ratio also improved, moving to 1.59% from 1.74% in H1 2025, a 15 basis point gain that reflects income growing materially faster than costs.

On the capital side, the CET1 ratio moved up approximately 60 basis points to 13.0%, and the group completed a £250 million Additional Tier 1 issuance in May alongside a tender of the existing £124 million instrument at a materially lower coupon, lifting the total capital ratio to 16.4% from 14.8% at year-end 2025. The liquidity coverage ratio rose sharply to 165.9%, providing significant headroom.

Credit quality and capital markets activity

Impairment losses rose to £50.7 million from £32.6 million in H1 2025, though Shawbrook said the increase reflects further provisioning against a small legacy development finance cohort rather than broader credit deterioration. The arrears ratio was stable at 1.7%, consistent with the Q1 2026 reading.

On the funding side, customer deposits grew to £18.8 billion, while the stock cost of deposits fell to 3.80% from 3.92% at year-end. The loan-to-deposit ratio tightened to 93.9%, which the group said gives it the flexibility to moderate deposit growth in the second half.

Capital markets execution was also active: the group completed two OTD transactions totalling £1.3 billion, including the £0.8 billion Aldbrock Mortgage Transaction 2026-1, its thirteenth securitisation. The group also confirmed on 4 August that it had signed a contract to sell the Blue Motor Finance loan portfolio, which had been classified as assets held for sale at £276.9 million.

Market context

Shawbrook occupies a distinct position in the UK specialist lending market, targeting SMEs, professional real estate investors and retail savers rather than competing head-on in the mass-market mortgage or unsecured consumer segments where margin compression from larger lenders is most acute. The improvement in its cost-to-income ratio is a notable data point at a time when several mid-tier UK banks are still working through the operational cost of legacy technology migrations.

The deployment of AI in underwriting workflows is a theme emerging across the broader banking sector, though most institutions are at earlier stages than Shawbrook’s claim of targeting a 50% reduction in real estate preparation time. Full-year guidance calls for a loan book of approximately £21 billion and a CET1 ratio above 13.2% on a pre-Basel 3.1 basis. The group faces the Basel 3.1 implementation timeline alongside its peers, and how that interacts with CET1 accumulation into 2027 will be a key question for investors at the full-year stage.

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