Sancus widens losses amid UK housing slowdown
Sancus widened its losses in the first half of this year and saw a slowdown in loan origination, amid the property market slowdown.
The London-listed alternative finance group – which focuses on property bridging and development loans – reported an operating loss of £3.8m in the first half of 2023, compared to a £2.1m loss in the first half of 2022.
It wrote £83m of new loan facilities during the first half of this year, down from £86m in the first half of 2022.
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“The uncertainty in residential real estate markets in the jurisdictions in which we operate, together with the impact of inflation and rising interest rates, has led to a slow down in loan origination…as we became more selective from both a credit and loan pricing perspective,” Sancus chief executive Rory Mepham (pictured) said in the firm’s interim results statement.
Its loan book size has remained unchanged since the end of 2022 at £169m. Sancus said it expects to report a “moderate increase” in its loan book by the end of the year, due to the number of new facilities written.
“Continued emphasis has been placed on actively managing loans once the initial drawdown has been made,” said Mepham. “This has been particularly important during a time when various market related pressures such as cost inflation are impacting our borrowers. Active management is helping us to deal with issues before they become problems and we are pleased to report that the percentage of loan book in recovery continues to reduce.”
However, Sancus saw its revenues tick up to £5.4m from £4.8m in the comparative period last year.
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“Whilst the outlook remains unclear, some of uncertainties present at the end of 2022 have now played out to a greater extent,” said Mepham. “For example, we have seen a series of rate rises from central banks during the first half and whilst some further incremental increases are possible, we are unlikely to see material further increases.
“In a world of asset price uncertainty the company remains optimistic that the residential property market will remains resilient, assisted by the perennial imbalance between supply and demand for housing across our target markets.
“A challenging dynamic remains but management have a clear plan to navigate the current market, avoid taking undue risks and be ready to take advantage of the opportunities that such times will inevitably present.”
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