Mortgage provider Together sees loan book reach £4.4bn in Q4 2021

Together Financial Services Limited (‘Together’ or ‘the Group’), one of the UK’s leading specialist mortgage and secured loan providers, recently announced its results for the quarter ended December 31, 2021.

For the quarter ended December 31, 2021, Together announced a group loan book of £4.4bn, up 13.8% compared with £3.9bn at December 31, 2020, and up 4.6% compared with £4.2bn at September 30, 2021

Weighted average indexed LTV remained very conservative at 51.6% (Q2‘21: 52.2%; Q1‘22: 52.4%), whilst average monthly loan originations stoof at £199.9m, up 168.7% in the quarter compared with £74.4m in Q2‘21 and up 11.7% when compared with £179.0m in Q1‘22 as the Group continued to increase lending volume.

In November and December 2021, loan originations exceeded £200m, which is above pre-pandemic levels. Weighted average origination LTVs remained conservative at 61.4% (Q2‘21: 58.5%; Q1‘22: 60.1%)

Interest receivable and similar income of £95.3m was up 2.6% compared with £92.9m in Q2’21 and up 2.2% compared with £93.3m in Q1‘22, reflecting a growing loan book.

Underlying net interest margin remained attractive at 5.8%, compared with 6.5% in Q2‘21 and 6.1% in Q1’22 with the reduction from the prior quarter largely due to product mix and is reflective of growth in some of the Groups lower-yielding products as it pursues strategic opportunities in areas such as residential term and buy to let lending.

Annualised cost of risk has decreased to 0.03% when compared with 0.6% in Q2‘21 due to a reduced impairment charge during the quarter primarily as a result of continued strong growth in property values.

Underlying profit before tax was up 12.4% to £43.0m when compared with £38.2m in Q2‘21 and up 10.8% when compared with £38.8m in Q1‘22.

Cash generation remained robust, with cash receipts of £507.4m, up 17.8% compared with £430.6m in Q2‘21 and up 20.6% compared with £420.8m in Q1’22 mainly due to increased redemptions during the period.

Following the appointment of an ESG consultancy in September 2021 and consultation with colleagues, customers, investors and other key stakeholders, Together also announced they have developed their ESG strategy.

Continued increase in diversity, liquidity and maturity of funding

The Group also announced £900m was raised or refinanced across three transactions since Sep ‘21:

• Nov‘21 Bracken Midco1 PLC successfully issued £380m 2027 Senior PIK Toggle Notes as part of the refinancing of its existing £368.2 million aggregate principal amount of Senior PIK Toggle Notes due 2023, reducing cash coupon from 8.875% to 6.75%;
• Nov‘21 issued an additional £120 million in aggregate principal amount of four 7/8% Senior Secured Notes due 2026 at an issue price of 100.5%, upsized in market from £100 million.
• Dec‘21 Delta ABS 2 upsized from £200m to £400m.

Facility Headroom increased to £1,495.5m at 31 Dec‘21 (31 Dec‘20: £1,021.9m) and accessible liquidity of £419.1m at 31 Dec‘21 (31 Dec‘20: £300m).

Commenting on their results, Gerald Grimes, Group CEO Designate of Together, said: “Q2 has seen sustained growth for Together, with our loan book up 4.6% on the previous quarter and up 13.8% on the same period last year, at £4.4bn. Our average monthly lending volumes increased by 11.7% on Q1 to £200m, with originations in November and December exceeding £200m and rising above pre-pandemic levels.

“In line with our growth strategy, we have raised or refinanced £900m across three transactions since September, adding to the diversity and maturity of our funding structure. Most recently, in December we refinanced and doubled the size of our Delta ABS facility for unregulated bridging loans from £200m to £400m.

“Although the UK economy is continuing to recover at a rapid rate, it is likely that consumers will be impacted by rising inflation, higher interest rates, and fiscal changes. While economists are forecasting a slowdown in economic growth in 2022, Together remains well placed to help increasing numbers of customers realise their ambitions and to play our part in supporting the UK’s economic recovery.”