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MAB coronavirus results ‘very encouraging’ as 2019 completions hit £16.7bn

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  • 24/04/2020
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MAB coronavirus results ‘very encouraging’ as 2019 completions hit £16.7bn
Mortgage Advice Bureau (MAB) has said early results from its coronavirus strategy focusing on remortgages and product transfers have been “very encouraging”.

 

MAB noted that as expected, focus and demand since the pandemic hit has increased in the re-mortgage and product transfer markets, and that it has prioritised resources in this area.

It added that while not all remortgage cases could be fully progressed due to lender and valuation restrictions, product transfers have significantly increased in recent weeks.

“By the time government restrictions are lifted, our typically purchase focused appointed representative (AR) firms will have improved their procedures for servicing existing clients in this sector, and we expect that increased efficiency to be maintained once purchase activity starts to return,” it said.

MAB also highlighted that although it expected protection sales to reduce in line with purchase activity, the pandemic had resulted in heightened awareness of the importance of these products.

“Alongside our realignment of resources to remortgage and product transfer transactions, is our immediate opportunity to have a meaningful impact on the lower protection attachment rates seen on non-purchase mortgages,” it continued.

“Plans are already in place to ensure the improvements we are seeing are maintained and built upon when advisers become busier again.”

 

Completions rise to £16.7bn

The firm made the statement as part of its annual results publication which revealed it completed £16.7bn worth of mortgage lending including product transfers in 2019 – an increase of 20 per cent on 2018.

The advice firm claimed a 5.7 per cent share of the UK new mortgage lending market, up from 4.7 per cent in 2018, with £15.2bn of completions going to new lenders – also up 20 per cent from the previous year.

Adviser numbers were also up 20 per cent hitting 1,457 at the end of 2019, including 82 from its purchase of First Mortgage Direct.

Overall in 2019, revenue was up 17 per cent to £143.7m and pre-tax profit was up 13 per cent to £17.7m.

The adviser growth continued into 2020 although the impact of the coronavirus has started to be felt with 1,473 advisers at 17 April 2020, including 196 currently furloughed.

“The furloughed advisers relate mostly to ARs that have strong links to estate agencies or the new build sector,” MAB said.

“Some adviser attrition has also occurred among the lower performing advisers and it is unlikely any of those advisers will be replaced until the purchase market fully recovers.”

 

Coronavirus impact

The coronavirus has impacted the firm with the share price tumbling from the recent high of 800p on February 26 to just 385p on Mar 19 as stock markets around the world collapsed, but it has since recovered to 525p today.

The firm drew down its £12m revolving credit facility on 20 March 2020 saying it was “in a stronger position than many to deal with the challenges to come”.

It also halved its proposed final dividend to 6.4 pence per share, with the intention to pay a further 6.4 pence when the board considers it prudent to do so.

“It is too early to predict the extent of the disruption to trading in the coming months and the associated impact on our results for the full year, though we do expect to see a reduction in revenue and profit. However, we remain very optimistic about MAB’s growth prospects,” the firm said.

Prior to the coronavirus impact, MAB said it had seen a clear change in customer sentiment following the General Election in early December.

This led to much improved activity in the housing market from the start of 2020 and the marked increase in activity remained strong up to the end of March 2020, despite increasing concerns about the coronavirus pandemic.

 

Technology an enabler

Chief executive Peter Brodnicki (pictured) said he was pleased with the results and that MAB had always had a clear strategy of pursuing and delivering long-term sustainable growth in market share, regardless of mortgage and housing market conditions.

“In 2019 we increased our market share of new mortgage lending to 5.7 per cent, a strong increase of 20 per cent versus the prior year,” he said.

“I am particularly pleased with our growth in new advisers over the last year, especially since as predicted, the subdued housing market led to very limited growth from the circa 40 per cent of our AR firms that are linked to estate agents.”

He added: “Technology continues to be an important growth enabler for MAB. We started piloting the first part of our new platform at the end of 2019 and we have now commenced a programme of implementation of new technology-led processes.”

 

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