Q3 Trading Update 2017

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Quarter ending £ in millions	30 Sept 2017	30 Jun 2017	Change In Quarter	30 Sept 2016	Change In Year

Assets	£14,574	£13,094	11%	£9,005	62%
Loans	£8,608	£7,750	11%	£5,193	66%
Deposits	£10,760	£9,805	10%	£7,297	47%
Loan to Deposit ratio	80%	79%		71%

Underlying Profit before tax¹	£7.2	£4.0	77%	£0.6	1,161%
Total Revenue	£78.1	£69.2	13%	£53.4	46%
Net interest margin	1.94%	1.92%		1.95%
Customer Deposit net interest margin²	2.22%	2.15%		2.08%

Underlying Profit after tax per share - basic	6.3p	3.7p	70%	0.0p	n/a
Underlying Profit after tax per share -diluted	6.2p	3.6p	72%	0.0p	n/a

·	The loan to deposit ratio increased to 80% (30 June 2017: 79%; 30 September 2016: 71%) as momentum in our lending continues.
·	As of 30 September total assets were £14,574m, up from £13,094m at 30 June 2017 and £9,005m at 30 September 2016; representing 11% growth in the quarter and year-on-year growth of 62%.
·	Net interest margin of 1.94% for the quarter up from 1.92% driven by the increase in loan to deposit ratio. Customer Deposit NIM (eliminating the distortions caused by the Bank's drawings from the Bank of England Term Funding Scheme) of 2.22% up from 2.15% quarter on quarter and 2.16% for full year 2016.

Deposits

·	As of 30 September total deposits were £10,760m, up from £9,805m at 30 June 2017 and £7,297m at 30 September 2016; representing 10% growth in the quarter and year-on-year growth of 47%. Deposits from Business customers represent 53% of 30 September 2017 total deposits (30 June 2017: 52%).
·	Cost of deposits in Q3 was 50bps, a reduction from 53bps in Q2 2017. This reflects the continued strong growth in non-interest bearing liabilities (current accounts).
·	Net deposit growth per store per month of £6.6m ($8.8m) in Q3 2017 versus £5.5m ($7.4m) in Q2 2017, and £5.6m ($7.5m) in Q3 2016, exceeding our guidance owing to strong growth across the entire network with a particularly strong quarter for business deposits. Annualised this represents £78m ($105m) growth per store.
·	Comparative store deposit growth (a "like for like" measure of deposit growth using deposit numbers from stores that have been operating for more than a full year) is 42%.

£ in millions	30 Sept 2017	30 Jun 2017	Change In Quarter	30 Sept 2016	Change In Year

Demand: non-interest bearing	£3,274	£2,998	9%	£2,019	62%
Demand: interest bearing	£5,113	£4,715	8%	£3,167	61%
Fixed term	£2,373	£2,092	13%	£2,111	12%
Deposits from customers	£10,760	£9,805	10%	£7,297	47%

Deposits from customers includes:
Deposits from retail customers	£5,108	£4,750	8%	£3,537	44%
Deposits from corporate customers	£5,652	£5,055	12%	£3,760	50%

£ in millions	30 Sept 2017	30 Jun 2017	Change In Quarter	30 Sept 2016	Change In Year

Gross Loans and advances to customers	£8,620	£7,760	11%	£5,202	66%
Less: allowance for impairment	£(12)	£(10)	12%	£(9)	32%
Net Loans and advances to customers	£8,608	£7,750	11%	£5,193	66%

Gross loans and advances to customers includes:
Commercial loans	£2,909	£2,611	11%	£1,824	59%
Residential mortgages	£5,503	£4,948	11%	£3,202	72%
Consumer and other loans and advances	£208	£201	4%	£176	18%

·	Record customer acquisition. Customer accounts have increased from 1,045,000 on 30 June 2017 to 1,124,000 at 30 September 2017; a record quarterly net increase of 79,000 accounts. This represents an increase of 33% year-on-year and an 8% increase in the quarter.
·	Capital ratios remain robust and well above regulatory requirements. Common Equity Tier 1 Capital ("CET1") as a percentage of risk weighted assets is 17.4%. Risk weighted assets at 30 September were £5,174m. Regulatory Leverage ratio is 6.2%.
·	Underlying profit before tax has grown 77% quarter-on-quarter to £7.2m (compared to £4.0m in Q2 2017). Statutory profit before tax of £6.7m has grown 131% compared to £2.9m in Q2 2017.
·	We opened our 50^th store in Peterborough on 29 September. A further five stores will open this year, including Luton (Store 51) on 27 October.

Companies

UK 100

Latest directors dealings

·	We look forward to opening twelve stores next year, including expanding into Birmingham and Bristol.
·	Our AIRB waiver application for residential mortgages will be submitted in Q4 2017 as planned.
·	The Williams & Glyn alternative remedies package presents an opportunity to deliver real choice for SMEs and we are preparing our bid for the funds to accelerate our reach and offering to serve more UK businesses.
·	We remain on track to deliver our first full year of profitability in 2017 and reiterate our 2020 guidance.

	Annual Growth Rate	2017		2016
Balance Sheet	Annual Growth Rate	30-Sep	30-Jun	30-Sep
		£'m	£'m	£'m
Assets
Loans and advances to customers	66%	8,608	7,750	5,193
Treasury assets³		5,393	4,827	3,400
Other assets⁴		573	517	412
Total assets	62%	14,574	13,094	9,005

Liabilities
Deposits from customers	47%	10,760	9,805	7,297
Deposits from banks		2,123	1,823	-
Other liabilities		598	654	901
Total liabilities		13,481	12,282	8,198
Total shareholder's equity		1,093	812	807
Total equity and liabilities		14,574	13,094	9,005

	Annual Growth Rate	2017		2016
Profit & Loss Account	Annual Growth Rate	Q3	Q2	Q3
		£'000	£'000	£'000

Net interest income		64,244	56,996	40,926
Fee and other income		12,915	11,440	9,197
Net gains on sale of securities		925	733	3,265
Total revenue	46%	78,084	69,169	53,388

Operating expenses	34%	(69,605)	(63,040)	(52,078)
Credit impairment charges		(1,328)	(2,098)	(743)

Underlying profit before tax	n/a	7,151	4,031	567

Underlying taxation		(1,900)	(1,071)	(352)

Underlying profit after tax	n/a	5,251	2,960	215

Listing and related costs		(316)	(391)	(693)
FSCS levy (net of tax)		176	(554)	370
Impairment of property, plant & equipment and intangible assets		(390)	-	(308)
Statutory profit/(loss) after tax	n/a	4,721	2,015	(416)