“Another strong half year of originations” trumpets Charter Court Financial Services (CCFS) at the top of its half-year results. On this measure, the specialist lender continues to make hay in a crowded and nervy UK mortgage market, as new lending in the six months to June hit £1.5bn. Exclude the impact of structured asset sales, and the year-on-year increase in the loan book would have been 34 per cent.
That helped to boost headline net interest income 16 per cent to £99.5m. And if you strip out expenses incurred in the OneSavings Bank (OSB) merger, the cost-to-income ratio remained at the 2018 average of 28.7 per cent.
However, the tie-up only accounts for £3.8m of the decline in pre-tax profit in the table below. The rest stems from lower gains on structured asset sales, and a £7.2m charge to account for the value of Charter Court’s derivatives.
The latter loss will reverse in future periods, although a near quadrupling in the provision for loan impairments to £2.7m is a more pressing concern. So too is a sudden spike in the cost of risk, from 3.6 basis points in 2018 to 8.2 so far in 2019, which management blamed on the “deteriorating and uncertain economic outlook” and a bump in loans at least three months in arrears.
Consensus forecasts are for earnings of 48p a share this year, rising to 50p in 2020.
| CHARTER COURT FINANCIAL SERVICES (CCFS) | ||||
| ORD PRICE: | 287p | MARKET VALUE: | £687m | |
| TOUCH: | 286.5-288.5p | 12-MONTH HIGH: | 375p | LOW: 224p |
| DIVIDEND YIELD: | 4.9% | PE RATIO: | 6 | |
| NET ASSET VALUE: | 205p | LEVERAGE: | 17 | |
| Half-year to 30 Jun | Total operating income (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2018 | 124.7 | 93.1 | 29.7 | 2.8 |
| 2019 | 125.0 | 82.6 | 26.0 | 4.3 |
| % change | +0.2 | -11 | -12 | +54 |
| Ex-div: | 29 Aug | |||
| Payment: | 20 Sep |
