Sancus: Lenders could benefit from “market uncertainty”
The “uncertain market outlook” may present opportunities for well-capitalised alternative lenders, according to Sancus.
In an interim market update, the property bridging and development lender said that the “perennial imbalance between supply and demand for housing” offers a favourable landscape for the company’s growth.
“The economic uncertainty is likely to lead to the continued retrenchment of banks from both small- and medium-sized enterprise and development financing which further provides attractive opportunities for alternative lenders,” it said. “We continue to track the geopolitical situation closely and note the potential for further supply chain disruption and inflationary risks in the construction sector.”
London-listed Sancus also said that the business had made “good progress” in returning to profitability in the first half of the year.
Group operating loss for the period halved year-on-year to £2.1m, while loan volumes rose to £86m from £53m.
“Our focus on returning the group to profitability remains our top priority,” chief executive Rory Mepham said in a stock market announcement.
“We are also looking to broaden our funder base and improve funding terms, expand the group’s presence in the UK and Ireland and grow its loanbook in the offshore markets of the Channel Islands and Gibraltar.”
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Sancus said that it has significantly invested in its sales and credit teams, which it credited with the rise in lending volumes.
“The group has invested in rebuilding and reinforcing the team and our headcount has increased from 32 at the end of 2021 to 42 at 30 June 2022,” it said. “We do not envisage further material hires. The new resource is focussed on expansion in our growth markets of the UK and Ireland and our credit and management focus as we deliver new business in the coming years.”
Sancus did not declare a dividend in the interim results but said “the board intends to revisit this policy at the appropriate time, should the profitability and cash flow profile of the business support the reinstatement of a dividend.”
In July, Sancus released a trading update which reported a 62 per cent year-on-year rise in lending to £87m in the first six months of 2022, although this figure was revised to £86m in the interim results.
Sancus rebranded from GLI Finance in May 2021, citing an increased focus on the alternative property finance sector as the reason for the change.