Shawbrook Bank has increased its profits by 14% in the first half of 2016 compared to the same period in 2015, according to interim results released by the group.

The challenger bank saw first half profit before tax (PBT) of £38m (€45.2m) in the year to 30 June, up from £32m (€38.1m) in 2015.

The results factor in the £9m (€10.7m) impairment charge that Shawbrook announced on 28 June, due to perceived irregularities in lending practices. Absent the charge, the group claims, profits would have risen 41% compared to H1 2015.

Shawbrook saw decreasing returns on tangible equity (RoTE), with RoTE for H1 2016 of 21.2%, down from 22.7% a year ago. However, the bank claims that without the impairment charge RoTE would have increased to 23.3%.

Underlying cost to income ratio for the group fell to 47.9% from 51% for H1 2015, and the group started new initiatives, expanding the personal loan proposition and employing a new strategy in development finance.

Steve Pateman, chief executive officer, Shawbrook Group, said: “I am delighted to report that the business achieved a strong first half performance,”

“This strong result is after taking into account the additional impairment charge announced on 28 June 2016 and absent this charge, underlying PBT in H1 2016 would have been 41% higher when compared to H1 2015.”

The group stated it was preparing for a changing macroeconomic environment following the UK vote to leave the European Union.

The report stated: “We will continue to be cautious yet confident in our outlook and we are well prepared for a softer economic outlook.”