TIDMMAB1
RNS Number : 3306O
Mortgage Advice Bureau (Hldgs) PLC
31 January 2023
31 January 2023
Mortgage Advice Bureau (Holdings) plc
("MAB" or the "Group")
Trading Update
Mortgage Advice Bureau (Holdings) plc (AIM: MAB1) today issues a
trading update for the year ended 31 December 2022, ahead of
publishing its final results on Tuesday, 28 March 2023.
The Group increased revenue for the year by 22% to circa
GBP230m, despite the immediately negative impact of September's
mini-budget on the mortgage market, with organic revenue growth of
10%. The acquisition of The Fluent Money Group ("Fluent") on 12
July 2022 added GBP22m of revenue. The Group's adjusted profit
before tax for the year ended 31 December 2022 is expected to be in
line with expectations.
The total number of Advisers at the year end was up 20% to
2,254(1) (2021: 1,885), including 182 advisers at Fluent, with the
average number of mainstream(2) advisers during the year up 21% to
1,988 (2021: 1,649), representing organic growth of 15%. The number
of mainstream advisers at the year end increased by 17% to 2,074
(2021: 1,774), with organic growth in mainstream advisers of
7%.
Following a leap in mortgage interest rates, the withdrawal of
many mortgage products and a rapid tightening in lenders'
underwriting criteria, Q4 saw significantly reduced house purchase
and re-financing activity. Buy-to-Let activity was also
significantly impacted. As a result of the sharp slowdown in all
mortgage activity, most of our AR firms suspended adviser
recruitment and reassessed their staffing requirements for 2023.
This has resulted in cutbacks in advisers by some firms,
particularly due to the significant short-term fall in purchase
transactions requiring a mortgage.
After the Chancellor's Autumn Statement, mortgage rates
stabilised and then improved a little towards the year end. The
number of mortgages available also started to increase and this
trend has strengthened into 2023. Although markets expect further
rises in the Bank of England base rate, we expect lending
conditions will continue to improve throughout 2023.
As anticipated, our congested pipeline of written new business
started completing at a faster pace in Q4 due to lower new business
levels freeing-up conveyancing capacity to process cases. We also
expect this improving trend to continue through 2023.
Current Trading and Outlook
Current activity levels are below the levels seen this time last
year. However, towards the very end of this month there have been
early signs of increasing lead volumes and written business across
the Group, which we anticipate will build steadily as borrowers
gain confidence in a more stable macroeconomic and interest rate
environment.
UK Finance estimates that gross new mortgage lending for 2022
was GBP322bn (2021: GBP308bn). The Intermediary Mortgage Lenders
Association and UK Finance's recent estimates of gross new mortgage
lending for 2023 are GBP265bn and GBP275bn respectively,
representing a 15% to 18% reduction versus 2022.
Although house purchase transactions will be lower this year,
overall we expect a second-half weighted recovery. Re-financing
opportunities from MAB's client bank are at a record level for
2023. In the wider market, 1.8 million borrowers' current mortgage
deals will expire during 2023, providing further opportunity for
MAB. It is forecast that Product Transfers will be a higher
proportion of re-financing transactions than in prior years. We are
ensuring our resources are deployed where our advisers and
customers need them most, with lead generation continuing to be a
major area of focus.
We expect to see a fall in adviser numbers in our current ARs
during Q1 2023 as firms reduce their headcount in line with
expected H1 2023 purchase activity. Lower lead levels result in a
tightening of adviser numbers and an increased focus on maximising
opportunities and productivity. However, we expect adviser numbers
in our current ARs to stabilise in Q2 2023 and then build gradually
in the second half as business volumes improve. We expect
recruitment of new AR firms to be boosted by the quieter market and
the tightening regulatory environment.
Despite the more challenging housing and mortgage market outlook
for 2023, MAB's long term fundamentals remain very strong. We have
taken a proactive and rigorous approach to costs, while progressing
with the planned investment in our proposition to ensure the
strongest possible recovery and market share growth in 2024 and
beyond. Current trading is in line with expectations.
1 Includes a total of 180 advisers at 31 December 2022 who are
later life advisers or advisers in directly authorised firms that
use MAB's subsidiary, Auxilium, a specialist protection service
provider, for protection. For both later life and directly
authorised advisers the fees received by MAB represent the net
income received by MAB as there are no commission payouts made by
MAB.
2 Excludes directly authorised advisers, later life advisers and
advisers from associates in the process of being onboarded under
MAB's AR arrangements.
Peter Brodnicki, CEO of MAB, commented:
"Despite the uncertain macroeconomic outlook, MAB remains very
well positioned to grow its market share strongly again through
2023. In times like these housing transactions are typically
postponed, not lost, and the opportunity these conditions generate
for new AR recruitment will benefit MAB in the medium term.
"The technology we have developed to help our AR firms optimise
lead flow from existing lead sources and clients will help support
an H2 recovery, and boost firm and adviser performance in all
market conditions. Strong and effective lead flow has a heightened
importance in times where purchase activity slows.
"We anticipate a very strong year ahead for re-financing, a slow
but steady improvement in consumer confidence and housing
transaction levels, combined with an increase in new AR recruitment
and the incremental impact of new lead generation initiatives. I am
confident that whilst continuing to grow market share this year,
MAB will be in a very strong position to regain significant
momentum in 2024."
Enquiries:
Mortgage Advice Bureau (Holdings) plc +44 (0)1332 525007
Peter Brodnicki, Chief Executive Officer
Ben Thompson, Deputy Chief Executive Officer
Lucy Tilley, Chief Financial Officer
Nominated Adviser and Joint Broker +44 (0)20 7260 1000
Numis Securities Limited
Stephen Westgate / Giles Rolls
Joint Broker:
Peel Hunt LLP
Andrew Buchanan / Mike Burke +44 (0) 20 7418 8900
Media Enquiries:
investorrelations@mab.org.uk
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulations (EU) No. 596/2014 as it forms part of
UK Domestic Law by virtue of the European Union (Withdrawal) Act
2018 ("UK MAR").
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END
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