Lender’s loan book soars to new record of £3.9bn

Mike McTighe

Cheshire mortgage and loan provider Together Financial Services announced its loan book has reached a new record of £3.9bn.

The Cheadle-based group announced its first quarter results this morning for the period to September 30.

It said the new loan book value was up 28.8% compared with £3bn at September 30, 2018, and up 5% compared with £3.7bn at June 30, 2019.

Average monthly loan originations of £176.2m in the quarter were up 28.1% compared with £137.5m in the quarter ended September 30, 2018, and only marginally lower compared with £182m in quarter ended 30 June, 2019, despite the seasonally lower levels of activity over the Summer months of July and August.

The interest receivable and similar income of £92.5m was up 12.6% compared with £82.2m in the first quarter of 2018/19 and up 2.1% compared with £90.6m in the fourth quarter of 2018/19, driven by interest earned on the growing loan book.

Profit before tax and EBITDA of £31.5m, and £64.6m, respectively, have been registered for the period, including additional charges for customer provisions of £3m.

Underlying pre-tax profit of £34.5m is up 13.6% compared with £30.4m in the corresponding quarter last year, predominantly due to increase in interest receivable and similar income, and down 7.6% compared with £37.3m in the fourth quarter of the previous year, which included certain year-end beneficial adjustments of £3.9m.

Underlying EBITDA of £67.6m was up 13% compared with £59.8m in the first quarter last year, but down 2.6% compared with £69.4m in the fourt quarter of 2018/19, which included certain year end beneficial adjustments of £3.9m.

Together reported it has further extended distribution channels, signing up four more mortgage networks and clubs, expanding the digital sales channel and establishing affinity relationships with key industry associations and professional bodies.

It completed the recruitment of the corporate relationships team to deepen relationships with larger customers and launched BTL Tech Hub to enhance experience for brokers with portfolio landlord cases.

It said the personal finance division has continued to focus on the resolution of certain regulatory matters. Changes to operational processes for application of forbearance and for communicating more clearly with customers have already been implemented.

The group successfully completed a third residential mortgage-backed securitisation, Together Asset Backed Securitisation 2019 – 1 PLC, in October, issuing rated notes of £315m on a mortgage portfolio of £332m.

And it increased the revolving Lakeside securitisation from £255m to £500m on improved terms and extended maturity, adding two further banks.

Chairman Mike McTighe said: “Together achieved strong growth in new lending in the quarter, as we increased the loan book to a new high of £3.9bn with consistently low LTVs (loan to value), while also maintaining robust profitability and delivering record levels of cash generation.

“Average monthly loan originations were up 28.1% on the same period last year, although they were slightly down on the quarter to June, reflecting the seasonally slower Summer holiday period.

“The group remained highly profitable and cash generative, with underlying profit before tax of £34.5m and cash receipts of £437.6m for the quarter.

“We have continued to add significant additional liquidity to support our growth plans, successfully completing our third public residential mortgage backed securitisation, issuing £315m of rated notes on a portfolio of £332m and upsizing our private revolving Lakeside securitisation to £500m in October.”

He added: “The UK’s economic outlook continues to be uncertain, with the ongoing Brexit negotiations and delays impacting sentiment, lead indicators remaining mixed and a General Election on 12th December.

“Despite the macroeconomic uncertainty, we continue to see strong demand from our customers, with record monthly originations of £207m in October, and believe the group remains well placed to deliver on its growth plans, underpinned by our robust asset quality, strong diversified funding base and through-the-cycle experience.”