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LSL’s total gross mortgage lending rises 11 per cent YOY to £45.6bn

  • 13/04/2023
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LSL’s total gross mortgage lending rises 11 per cent YOY to £45.6bn
LSL Group’s total gross mortgage lending, including product transfers, came to £45.6bn in 2022, which is up from £41.1bn the year previously.

In its latest results, the group said its financial services network reported gross purchase and remortgage completion lending of £32.7bn, which is up from £29.5bn in 2021.

The group added that this compared to the whole market which had a growth of 1.9 per cent.

The firm said its share of the UK purchase and remortgage market, excluding product transfers, had grown to 10.4 per cent, which is up from 9.6 per cent in 2021.

The underlying operating profit for its financial services network business rose eight per cent year-on-year to £15.5m.

As a whole, the financial services division’s underlying operating profit fell by £1.5m, as the group’s direct to consumer adviser businesses were impacted by lower levels of activity, especially in new build and purchase markets.

The total number of advisers came to 2,867, with more than 700 other firms submitting business through the mortgage club.

Gross revenue per average adviser rose to £93,900, up from £90,100 the previous year.

LSL said the group’s overall underlying profit came to £36.9m, which is a decrease from £49.3m in 2021. The firm attributed this to a smaller purchase market and the adverse effect of the mini Budget on its surveying and valuation business last year.

The company reported a group operating loss of £56.7m, compared to a £72.6m profit in 2021 which was due to the board cutting the carrying value of goodwill by £87.2m.

“This is a non-cash item reflecting the impact of more conservative mid-term housing market assumptions, higher discount rates and the disposal of non-core businesses,” it explained.

The company said in 2021 its statutory operating profit was boosted by a £29.4m gain on the disposal of interests in joint ventures, which was part of its strategy to “exit from non-core businesses”.


Surveying and valuation and estate agency business

The group said the mini Budget had cut its underlying operating profit for its surveying and valuations division by at least £5m.

Its underlying operation profit came to £20.4m, which is down £3.2m in 2021 but 25 per cent up on its 2019 figure.

The firm added that its income per job had grown £2 year-on-year to £175.

Jobs per average surveyor reduced slightly in the period to 1,065, compared to 1,079 in 2021.

LSL said it had “continued to diversify our revenue streams” in the division, launching a consumer-facing website to support its direct-to-consumer proposition.

It noted that in this segment, there had been a 60 per cent increase in revenue year-on-year.

David Stewart (pictured), group chief executive of LSL, said: “Providing data services to lenders has strengthened our relationships and helped secure contract wins and increased allocations of valuation instructions, whilst we have established a strong position in the equity release valuation segment, a sector we expect to grow significantly over the medium term.”

He added that equity release instructions accounted for approximately 16 per cent of revenue in 2022.

On the estate agency side, its underlying operating profit came to £10.5m, which is £7.9m below its performance in 2021.

The company said this was partially due to the stamp duty holiday in 2021, as well as slow exchange speed and reduce house purchase activity.

It added that revenue fell five per cent on 2021, while lettings revenue grew four per cent year-on-year and its national market share increased from 1.28 per cent in 2021 to 1.3 per cent.


Internal sales to Pivotal Growth ‘exciting move’

LSL said Pivotal Growth, launched in 2021 as a joint venture with Pollen Street Capital, had acquired eight businesses comprising of around 330 advisers.

This includes Group First and RSC, Embrace Financial Services and First2Protect, the latter two being sold earlier this week.

Speaking on the most recent sales, Stewart said: “I believe this is an exciting move for both Pivotal Growth and LSL, providing increased scale for Pivotal Growth and the right environment for these businesses to grow further.

“It has also helped simplify the LSL Group considerably, substantially reducing our cost base and exposure to housing market cycles whilst also reducing management stretch to enable us to focus on the substantial opportunity to grow the remaining financial services network, surveying and valuation and estate agency businesses.”


LSL ‘well-placed’ to benefit from improved market conditions in future

Stewart said he group had made “substantial progress” on its strategy to “reduce our exposure to housing market cycles, simplify the business and focus investment on high-growth areas”.

He pointed to the sale of Marsh and Parsons this year to Dexters for £29m, as well its maintained investment in technology businesses, Mortgage Gym and DLPS.

The firm said this year it would “complete our work to re-focus these businesses”, which would be folded into financial services network division.

He continued that its financial services-led growth was “centered on the B2B service” offered to network members, and there were “significant opportunities to grow further by expanding the number of advisers and the product range they distribute”.

“The network business offers a highly scalable, low-cost platform through which strong margins can be sustained in different market conditions and is consistent with our vision of LSL as a B2B service provider,” Stewart said.

Looking ahead, LSL said it expected market conditions to “remain challenging” in the first half of the year, but to then improve thereafter due to a “strong remortgage market”, returning consumer confidence and transaction levels, as well as a fall in mortgage rates.

It continued that trading within its financial services network and estate agency business was “in line with expectations” and there were “signs of increasing momentum”.

On the surveying and valuation side, it said that valuations in areas like equity release and buy-to-let markets had recovered less quickly following interest rate rises and market disruption last year as they were “trending significantly below 2022”.

The group said it “remains very well-placed to benefit as market conditions improve”.

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