LendInvest ‘disappointed’ in quarterly performance and lowers profit expectations

The lender said trading for the period fell short of its internal budgets and reported a shortfall in its unaudited profit before tax of £4.5m. 

The period, which is the first four months of its 2024 financial year, was impacted by its capital division which specialises in larger, more complex loans of £5m and over to fund property transactions. 

This includes development finance and structured bridging. 

LendInvest said the shortfall was caused by a drop in the volume of originations where the lender earns arrangement fees on new loans. It suggested that the demand for development finance had declined as developers became cautious. It also attributed this to limited capacity for new lending in existing managed funds. 

LendInvest said the performance fees it earned from third-party funds were “below expectations”, which hinted at squeezed lending margins and higher development costs. 

Within its mortgages division, which includes buy-to-let, specialist residential homeowner and smaller bridging loans, the lender said the underlying performance and positioning of its buy-to-let business was still “encouraging”. However, it said the operationalisation of its new forward flow facility for buy-to-let lending had “taken longer than anticipated”. 

LendInvest said this has since been resolved, but had impacted the volume of originations in July and August. 

The lender also faced “slightly higher” administrative costs due to one-off expenses. 

Making good progress 

LendInvest said: “Whilst disappointed with current financial performance, management is confident that the core business fundamentals remain strong.” 

It said its full-year profit before tax would be “materially below” market expectations and as a result, it would reduce its balance sheet exposures. It will also take cost-cutting measures and expects to benefit from this in its 2025 financial year. 

LendInvest is also looking to increase its lending capacity for the capital division by raising funds with the expectation to deploy this in its current financial year. 

It added: “The board is confident that the proactive strategies noted above will improve performance in the coming months.” 

The lender said it was still making “good progress on several fronts”, adding that completions in its flow bridging product were still strong and its launch into the large specialist residential sector was “on track” and “building good momentum”. 

It said the prospects for its buy-to-let business were “strong” following the completion of a new forward-flow funding arrangement. 

LendInvest also plans to continue developing its technology to improve the lending process and make it more competitive. 

The lender posted a pre-tax profit of £14.3m for 2023, which was slightly up on the previous year’s figure of £14.2m.