The lender’s financial results, which covered its Q1 2023/2024 period, showed that on average it lent £223.5m each month. This was slightly up on the previous quarter’s average of £218.6m but down on the previous year’s monthly average of £289.7m.
During the quarter, Together’s loan book rose 16.3 per cent to £6.6bn, while the average loan to value (LTV) remained low at 56.2 per cent. This was just slightly higher than the previous quarter’s 55.3 per cent average.
The lender said it was seeing a “gradual increase” in arrears in line with the wider sector, but insisted this remained low and below pre-pandemic levels.
Its underlying profit before tax came to £47.3m, up from £34.7m a year ago and the group said it remained “highly profitable and cash generative”. However, this was 24 per cent lower than the previous year, which it attributed to non-cash accounting adjustments.
Together’s underlying net interest margin came to 5.5 per cent during the quarter, which was down slightly on the previous quarter’s 5.7 per cent, but up on the prior year’s 4.9 per cent margin.
A ‘sustainable’ performance
Gerald Grimes (pictured), group CEO designate of Together, said: “Together delivered another strong and sustainable performance in the quarter to 30 September, growing the loan book to £6.6bn with low LTVs and headline arrears, while remaining highly profitable and cash generative.
“Originations increased slightly against the previous quarter, as we delivered interest receivable and similar income of £182.9m, underlying profit before tax of £47.3m and cash receipts of £653.8m, in spite of the wider macroeconomic volatility. We continued to further strengthen and diversify our funding, raising or refinancing around £1bn of facilities and ending the quarter with £1.2bn of funding headroom, leaving us well placed for future growth.”
He added: “The UK economy continues to face headwinds, with GDP growth forecast to remain subdued as interest rates remain higher well into 2024. Against this backdrop, many more customers may find themselves underserved and look to specialist lenders for support.
“With a clear purpose, a proven and well-funded business model and a successful multicycle track record, Together will be there to help customers solve problems and realise opportunities, as we have been for the last 50 years.”
Fourth commercial real estate MBS
Together also announced that it had priced its fourth commercial real estate mortgage-backed securitisation (MBS) at £380.4m.
The CRE4 is supported by a portfolio of first and second charge mortgages, with 97.8 per cent of these being first charge. The loans are secured against small value commercial, residential and mixed use properties in England, Wales and Scotland.
Some 31.3 per cent of the borrowers within the portfolio are self-employed.
Gerald Grimes, group CEO designate of Together, said: “We are delighted to announce the successful pricing of our fourth small balance commercial real estate MBS. The £380.4m CRE4 facility provides additional headroom as we further increase our support for UK SMEs and continue to shape our business for an exciting future.”
Gary Beckett, group managing director and chief treasury officer at Together, added: “Since January 2023, we have successfully added over £1.4bn in funding to support our growth ambitions, highlighting the strength of our business model, quality of our loan book and strong ongoing support from our investors.”