This will be an improvement on the £14.5m loss it recorded in 2020 and follows newly appointed CEO Rory Mepham’s goal to make the lender profitable again.
Sancus is an alternative finance provider that offers bespoke bridging and development finance.
It generated a £9m revenue for the year to 31 December 2021, down on the previous year’s £10.9m, which was below its expectations.
Sancus attributed the revenue reduction to a decrease in the loan book and the impact of Covid on new loans written, which delayed loan closures and therefore caused a reduction in transaction fees.
Its loan book value dropped 17 per cent to £141m annually. This primarily occurred in its offshore bases of Jersey, Guernsey and Gibraltar where the management teams underwent restructuring.
An evaluation of the group’s loan book was completed when Mepham was appointed in January 2021. Particular focus was placed on reviewing historic loans which were either delinquent or had defaulted.
As a result, the group expects to report an increase in its credit loss provisions of £6.5m for 2021, up from £4.7m the previous year.
Almost all of these provisions have been made in relation to legacy loans written in or prior to 2018. The new senior management team have established deliverable strategies for these loan positions, which are now in progress, the group said.
Part of Mepham’s plans to make the lender profitable is to rely on the growth in loans under management. To achieve this, it will expand its presence in the UK and Ireland as well as rebuild its loans under management in its offshore markets.
Sancus made a number of appointments last year, increasing its headcount to 35 at the end of 2021, compared to 25 at the end of 2020.
This has resulted in an increased operating expenditure to £6.2m, up from £5.6m the year before. This investment is expected to support its growth over the coming years.