Together well positioned for future after strong second quarter

Together Financial Services, the Cheadle-based specialist mortgage and secured loans provider, improved pre-tax profits during the second quarter, it announced today.

In the quarter ended December 31, 2020, the business reported pre-tax profits of £39.3m, up from £25.5m in the same quarter last year.

Interest receivable, and similar income, for the period stood at £92.9m, against £96.8m last year. The return on equity was 15.3%, up from 11.1% in 2019.

The group loan book at December 31, 2020 was £3.9bn, down 6.6% compared with £4.2bn at December 31, 2019, and down 2.9% compared with £4.0bn at September 30, 2020.

Cash generation remained robust, with cash receipts of £430.6m, as redemption levels remained strong

Together said a number of key modernisation projects are now under way to streamline the application journey, increasing efficiency, reducing costs and improving user experience for customers and intermediaries.

And it said it continued to strengthen its capital and liquidity positions to support future growth.

It successfully issued £500m Senior Secured Notes at 5.25%, due in 2027. Proceeds were used to redeem the £350m Senior Secured Notes at 6⅛%, due to mature in 2024 and support further growth in lending.

The group has undrawn facility headroom of £1.127bn at February 8, 2021, up from £997m by December 31, 2020, and £872m at September 30, 2020.

There is also immediate accessible liquidity of £366m at February 8, 2021, up from £300m by December 31, 2020, and £285m at September 30, 2020.

Together supported customers throughout the pandemic, providing mortgage-payment deferrals to around 7,800 customers. At February 15, 2021, 2.1% of customers by value remained within a payment deferral (November 5, 2020: 3%).

Of the accounts who have exited payment deferrals, 82% have resumed full payments, 14% are making part payments and four per cent making no payments.

Gerald Grimes, group CEO designate, said: “Together delivered another robust performance in the quarter to 31 December, as we remained focused on supporting our customers, protecting our colleagues and shaping our business for the future.

“Average monthly lending rose to £74.4m as we continued to cautiously increase originations, with the loan book ending the quarter at £3.9bn with a very conservative LTV of 52.2%.

“We remained highly profitable and cash generative, with underlying profit before tax increasing to £38.2m and cash receipts increasing to £430.6m as redemptions continued to be strong during the quarter and, at 8 February, the group had accessible liquidity of £366m.”

He added: “We also further extended our funding headroom with the successful issuance of a £500m bond in January, the first sterling corporate bond issuance in 2021 and since the formal completion of the Brexit process.

“The issuance was upsized by £50m on the back of strong investor support and contributed to the group having undrawn facility headroom of £1,127m at 8 February.

“While we expect economic conditions to remain uncertain for some time, with strong levels of capital and liquidity and our modernisation and transformation programmes under way, we believe the group is well positioned to take advantage of future market opportunities and to play our part in supporting the UK’s economic recovery.”