LEI: 213800NWMK3O4UWP9N91
18
April 2024
LendInvest
plc
FY 2024 Trading
Update
Good progress against
strategic objectives in H2
LendInvest plc (AIM: LINV), the UK's
leading platform for mortgages, announces its trading update for
the year ended 31 March 2024, ahead of its full-year results
announcement in July 2024.
Rod
Lockhart, Chief Executive Officer of LendInvest,
said:
"This past year has been a tale of two halves for us at
LendInvest. The first half was characterised by significant
internal restructuring - we prioritised liquidity, balance sheet
flexibility, and reducing our cost base - crucial steps towards
securing the financial health of the business. In the second half
of the year we are now beginning to see the fruits of our labour.
The benefits of our early-year actions are becoming apparent, and
we're experiencing a turnaround in the operating
environment.
"Throughout the year, despite the broader challenges, we've
continued to make progress against our long-term strategic goals.
Our adaptability in response to dynamic market conditions and
commitment to our customers are underscored by our ongoing product
innovation and the evolution of our proprietary next-gen
technology.
"The launch of the LendInvest Mortgages Portal marks
significant progress in our roadmap, seamlessly integrating our
entire mortgage suite into one unified platform. This development
has transformed our operations in the Mortgages division,
significantly enhancing efficiency for both our customers and
internal teams.
"There are also encouraging signs in the broader market
landscape, and our achievement of a record number of Buy-to-Let
offers in February reflects the robust demand and confidence in our
product offerings and service. As we move forward, our sights are
firmly set on bolstering these efforts, with a clear focus on
driving towards our goal of returning to profitability during
FY2025."
|
31 March 2024
(£m)
|
31 March 2023
(£m)
|
Growth
(%)
|
30 September
2023
(£m)
|
Growth
(%)
|
Platform Assets under
Management
("Platform AuM")
|
2,783.3
|
2,587.0
|
7.6
|
2,695.1
|
3.3
|
Funds
under Management
("FuM")
|
4,127.3
|
3,605.9
|
14.5
|
4,167.4
|
(1.0)
|
●
Platform AuM
increased by 7.6% year-on-year, and by 3.3% in
H2, driven by growth across all key
products in the Mortgages division, and 83%
of Platform AuM is now off balance sheet.
○
The pace of recovery picked up in Q4 in
particular, with quarter-on-quarter growth of 106% in Buy-to-Let
(BTL) signed applications and 96% growth in offers. This helped
drive 102% growth in completions in Q4 vs Q3, as a result of
enhanced pricing agility, optimised operating capacity, and a
superior customer journey, driven by our new proprietary next-gen
Mortgages Portal.
●
Growth in
third-party managed Funds under Management, optimising the balance
sheet primarily through the sale of
the residual economic interest in Mortimer BTL 2023-1, in addition
to the successful closing of a number of new Separate Account
mandates.
○ Total FuM
increased 14% year-on-year, driven by the completion of new
Separate Account mandates (£700m) in the Mortgages division and the
derecognition of Mortimer BTL 2023-1.
○ Sale of the residual
economic interest in Mortimer BTL 2023-1 raised
£410m of third-party managed Funds.
○ The
proportion of Funds managed on behalf of third-party investors
increased by 36% year-on-year and by 10% in H2 vs H1. We continue
to explore a strong pipeline of investor opportunities that will
optimise returns and increase our addressable market, we expect to
secure new Separate Account/Forward Flow arrangements across both
LendInvest divisions over this financial year.
●
Launch of
proprietary next-gen Mortgages Portal, which consolidates the management of Residential, BTL, and
short-term mortgages into a single user-friendly mortgage platform,
driving cost efficiencies through increased automation in
operations. Headcount cost run rate has been reduced by 25% whilst
maintaining operating and origination capacity.
○ This evolution of the portal
streamlines the case management process from credit-backed
decisions in principle ("DiPs") and applications, through to
offers, removing unnecessary friction for brokers to manage their
cases efficiently. Case information can now be retrieved up to 80%
faster by brokers. A full application can be submitted by a broker
in under five minutes, which is supported by automated data
gathering and underwriting.
○ The portal provides the
capability for a new product transfer process which will allow
brokers to switch products at maturity with a few clicks, ensuring
our offerings are as accessible and adaptable as possible to meet
the evolving needs of our brokers and their customers, allowing us
to improve customer retention.
○ The
Mortgages Portal provides an enhanced capability to deliver pricing
changes three times faster than before, reducing time 'out of the
market', ensuring we remain competitive and responsive to market
dynamics, but equally providing certainty to customers,
particularly through periods of market volatility.
Outlook and market backdrop
The Board expects to announce results for the year ended 31
March 2024 in line with market expectations with respect to both
Net Operating Income and Profit Before Tax, and remains cautiously
optimistic of returning to profitability during FY2025 noting the
following factors:*
Easing financial conditions boosting
confidence
Following volatile financial
conditions in 2023, we are observing rising confidence in the UK
property market, largely due to expectations for falling inflation,
declining interest rates and falling swap rates. The Bank of
England (BoE) has reported a significant reduction in the market's
average quoted mortgage rate for 75% LTV 2 year fixes, falling to
4.77% at the end of February, from a July peak of 6.18%.
Mortgage market
activity
Mortgage approvals for house
purchase for the period ending February 2024 were up 39.8%
year-on-year and up 32.5% for remortgaging. Additionally, the
Association of Short Term Lenders (ASTL) reported that the short
term mortgage market has grown by 16% year on year, reaching a new
high of £7.6bn outstanding as at the end of 2023, fuelled by a near
26% increase in applications, worth approximately £9.6bn in the
final 3 months of 2023.
Market opportunities in Buy-to-Let lending
In late December when 5 year swap
rates fell to 3.32% we were able to leapfrog the market by using
the superior product management capabilities within the Mortgages
Portal and release products that ultimately tripled BTL application
volumes in early January. This indicates strong pent-up demand
within the BTL sector, that can be capitalised on with further
windows of opportunity. Through a combination of powerful,
end-to-end mortgage processing technology and a diversified funding
base that is expected to grow in coming months, we are well
positioned to exploit this demand.
* Company compiled market
expectations for net operating income and profit before tax for the
year ended 31 March 2024: £36 million and -£15.9 million,
respectively on a mean basis.