UK bank Shawbrook reports rise in Q1 underlying profit

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LONDON, May 5 (Reuters) - British bank Shawbrook reported a jump in first-quarter underlying pretax profit on Thursday, and said it would expand customer loan balances to 8.5 billion pounds ($12.34 billion) by 2020.

The lender, which was founded in 2011 and went public last year, said underlying pretax profit rose 20 percent to 22.3 million pounds for the quarter ended March 31.

Net (LSE: 0LN0.L - news) loans and advances grew 6 percent to 3.57 billion pounds.

Shawbrook lowered its full-year net interest margin guidance slightly to 5.5 percent.

The bank has been aiming to maintain net interest margin at about 6 percent in the medium term, according to the target set during the initial public offering.

Founded in 2011, London-listed Shawbrook is one of several "challenger banks" to emerge since the financial crisis to fill a gap in small business lending after larger banks slimmed down to focus on bolstering their capital to meet tougher regulatory requirements.

Shawbrook's return on tangible equity improved to 23.1 percent.

The company said it expected full-year return on tangible equity to be in line with the quarter.

Shawbrook's stock, which has fallen 4.6 percent since listing last year, was down 3.8 percent at 280.7 pence in early trading.

($1 = 0.6888 pounds) (Reporting by Noor Zainab Hussain; editing by Rachel Armstrong and Jason Neely)