together financial services

Together reports 'resilient performance' despite Covid-19

Together Financial Services Limited has announced it has delivered a "resilient performance" in its latest trading update for the first quarter of its financial year (ending 30th September).

The group loan book for the quarter reached £4bn, down 3.9% compared to £4.2bn on 30th June 2020, but up by 3.2% compared to the results in the quarter ending 30th September 2019. 

Average monthly loan originations stood at £43.6m, a 118% increase from £20m in Q4 2020, but a 75.3% drop from £176.2m in Q1 2020.

The weighted average origination LTVs have remained conservative at 56.4%, an increase from Q4’s 46.9%.

However, Together has registered £95.3m of interest receivable and similar income, a 3.7% drop compared to £99m in Q4 2020, which is consistent with the decrease in the size of the loan book.

The net interest margin was 6.4%, only slightly down from Q4 2020’s 6.5%.

According to the lender, this is a "highly attractive" result, particularly given the low LTVs and consequent high levels of collateral underpinning the quality of the loan book.

The cost of risk for the quarter was 1.31% on an annualised basis, slightly lower than 1.55% in Q4 2020, but an increase compared to 0.58% in Q1 2020.

Together claimed that this reflected the deterioration in the macroeconomic conditions and outlook since the Covid-19 outbreak and the resulting impact on loan book performance. 

Despite the challenging climate, the lender’s underlying EBITDA has decreased only slightly to £65.4m, compared to £67.7m in Q4 2020 and £67.6m reported in Q1 2020.

The report stated that cash generation remained robust, with cash receipts of £377.3m — a 25.6% increase from £300.4m in Q4 2020, but a 13.8% drop compared to Q1 2020.

Commenting on the results, Gerald Grimes, group CEO designate at Together, said: “Together delivered a resilient performance in the quarter to 30th September, despite the ongoing challenges of Covid-19, as we continued to focus on supporting our customers, protecting our colleagues, and shaping our business for the future.

"The group remained robustly profitable and cash generative, with underlying profit before tax of £33.9m," he added.

“We also further strengthened our liquidity and capital positions, including issuing our fourth public RMBS, the £366m TABS 4, and extending our revolving credit facility. 

At 6th November, Together had undrawn facility headroom of £937m and accessible liquidity of £287m.

“While we expect conditions to remain challenging for some time, as we deliver our modernisation and transformation programmes and with strong levels of capital and liquidity, we believe Together is well positioned for the future and to play our part in supporting the UK's economic recovery.”

The update revealed the completion of its employee consultation process, which resulted in reducing colleague numbers by 175 and savings of circa £9m per year.

It expects lending volumes to continue to grow cautiously, but remaining below pre-Covid-19 levels in the near term, while credit risk becomes more transparent and measurable and as it delivers efficiency benefits from its modernisation and transformation projects.

In addition, the lender launched its new mobile phone app last week, in partnership with Nivo, which aims to shorten processing times and improve completion timescales.

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