Sancus writes £53m of new loan facilities in H1 2021

Sancus Lending Group has written £53m worth of new loan facilities in the first six months of 2021, compared to £50m for the full 2020 year.

The firm rebranded from GLI Finance in May, reflecting its continued focus on property lending in bridging and residential development financing.

According to Sancus, it continues to see significant demand for development finance and is looking to increasing its presence in the bridging market with key hires.

Despite this, the lender’s asset-backed lending loan book decreased by 7% since the end of 2020 from £171m to £160m — however, it expects the loan book to increase by the end of the year.

Offshore lending makes up the majority of its loan book at £132m (Dec 2020: £147m), followed by UK loans at £18m (Dec 2020: £15m) and Ireland at £10m (Dec 2020: £9m). 

While offshore revenue dropped by 11% in the period, mainly due to some large exit fees which were received in 2020, the UK reported for the first time an operating profit of £100,000 against a loss of £500,000 last year, with revenue growth up five-fold in comparison to June 2020. 

Meanwhile, Ireland results are relatively flat (revenue up 6%) against last year — however, loan closures have been slow in H1 2021 due to continued lockdowns in the region, with the group forecasting results to pick up in the next six months.

Overall, the company’s revenue for the half year stood at £5m (H1 2020: £5.5m).

In addition, its operating loss was £4.1m (H1 2020: loss of £500,000), with £3m relating to an increase in expected credit losses under IFRS9, predominantly related to interest debtor balances where the group saw loan repayments taking longer to complete over the past 18 months due to market conditions, impacting the expected recoverability of the interest due.

Transaction fees were up to £1.7m in H1 2021 compared to £600,000 last year, reflecting the surge in loan activity.

Rory Mepham, interim CEO at Sancus Lending Group — who took the position on 1st July following  Andy Whelan’s resignation — said: “The past 18 months have been highly dynamic and it is our expectation that the outlook will continue to provide both opportunities and challenges. 

“Reduced willingness of traditional lenders to participate in the residential development and bridge lending space has offered Sancus the opportunity to increase the speed of our growth in the target expansion markets of Ireland and the UK, and continue to grow the offshore markets while, at the same time, various Covid-related factors have continued to delay our exit from a number of historical loan positions. 

“As we navigate our path through the expected recovery, we remain confident that the business is in a strong position from which to grow.

“The wider market offers a positive outlook for an alternative lender such as Sancus, particularly in the development lending space where traditional banks remain inactive. 

“While we have recently seen some increased competition from alternative lenders, the residential property supply/demand dynamic in all of our target markets remains favourable, meaning that there is sufficient scale of opportunity for the business to achieve its growth objectives. 

“With reasonable prospects for economic growth in the remainder of the year and thereafter, it is expected that there will continue to be favourable underlying market fundamentals for the foreseeable future.”

Steve Smith, chairman at Sancus Lending Group, added: “We certainly do not underestimate the scale and challenge ahead but, with the continuing support of shareholders and other stakeholders, we believe that we have the strategy, systems and personnel to put the business onto a much firmer footing. 

“I look forward to reporting positive developments in the coming period.”

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