Half Year Results for the Six Months to 31 January 2022
Adrian Sainsbury, group Chief Executive Officer, commented:
“We delivered a good performance in the first half of the 2022 financial year, with strong income growth in the Banking division and positive momentum in Asset Management, while Winterflood saw reduced trading opportunities following the exceptional highs experienced during the Covid-19 period. We are pleased to declare an interim dividend of 22.0p, returning to the pre-pandemic level and reflecting the group's strong underlying performance and continued confidence in our business model.
Looking ahead, we are mindful of the highly uncertain external environment, including the impact of increasing geopolitical tensions and rising inflation on our customers and wider financial market conditions. Nevertheless, we remain well placed to continue delivering on our long track record of profitability and disciplined growth.”
Highlights
- Group statutory operating profit increased 1% to £128.9 million, with adjusted operating profit also up 1% to £129.8 million, reflecting 12% income growth in Banking and 14% in Asset Management, offset by a reduction in trading income in Winterflood
- Adjusted operating profit in the Banking division was up 26% to £120.2 million, reflecting loan book growth of 8.2% year-on-year (1.9% in the first six months of the 2022 financial year) at an annualised net interest margin (“NIM”) of 7.9% (H1 2021: 7.7%)
- The annualised bad debt ratio of 1.1% (H1 2021: 1.3%) primarily reflected the impact of updated loss rate assumptions for the Novitas loan book. Excluding Novitas, the annualised bad debt ratio was 0.2% (H1 2021: 0.7%), reflecting the benefit of provision releases and strong underlying credit performance across our business
- The Asset Management division saw positive momentum, generating annualised net inflows of 8%, with adjusted operating profit up 18% to £14.5 million
- Winterflood saw reduced trading opportunities following the exceptional highs experienced during the Covid-19 period, with operating profit of £8.8 million (H1 2021: £34.2 million), and incurred only one loss day, in January, despite extreme market volatility. Winterflood remains well placed for when investor appetite returns
- The group maintained a strong capital, funding and liquidity position. Our common equity tier 1 (“CET1”) capital ratio was 15.1% (31 July 2021: 15.8%), significantly above the applicable minimum regulatory requirements
- The group achieved a return on opening equity (“RoE”) of 12.2% (H1 2021: 13.2%) and we have declared a 22.0p interim dividend, returning to the pre-pandemic level, reflecting the group's strong underlying performance and continued confidence in our business model
Key Financials 1
|
|
First half 2022 |
First half 2021 |
Change % |
|
|
Adjusted operating profit2 |
£129.8m |
£128.5m |
1 |
|
|
Operating profit before tax |
£128.9m |
£127.0m |
1 |
|
|
Adjusted basic earnings per share3 |
64.0p |
64.0p |
– |
|
|
Basic earnings per share3 |
63.5p |
63.2p |
– |
|
|
Ordinary dividend per share |
22.0p |
18.0p |
22 |
|
|
Return on opening equity |
12.2% |
13.2% |
|
|
|
Return on average tangible equity |
14.2% |
15.7% |
|
|
|
Net interest margin4 |
7.9% |
7.7% |
|
|
|
Bad debt ratio4 |
1.1% |
1.3% |
|
|
|
|
|
|
|
|
|
|
31 January 2022 |
31 July 2021 |
Change % |
|
|
Loan book |
£8.6bn |
£8.4bn |
1.9 |
|
|
Total client assets |
£17.2bn |
£17.0bn |
1.1 |
|
|
CET1 capital ratio (transitional)5 |
15.1% |
15.8% |
|
|
|
Total capital ratio (transitional)5 |
17.3% |
18.3% |
|
|
|
1 Please refer to definitions on pages 22 to 24. 2 Adjusted operating profit is stated before amortisation of intangible assets on acquisition of £0.9 million (H1 2021: £1.5 million). 3 Refer to Note 4 for the calculation of basic and adjusted earnings per share. 4 Net interest margin and bad debt ratio calculated on an annualised basis. 5 In line with the amended Capital Requirements Regulation (“CRR II”), effective on 23 December 2020, both the CET1 capital ratio and total capital ratio at 31 July 2021 included a c.50bps benefit related to software assets exempt from the deduction requirement for intangible assets from CET1. This benefit has been reversed with a corresponding reduction of the CET1 and total capital ratios upon implementation of PS17/21 on 1 January 2022. |
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