Specialist
Former senior executive at Together Financial Services Ltd (Together)
Agenda
- High-rate environment impact on Together’s NPE (non-performing exposure)
- Dynamics between speciality lending and traditional banks
- Loan-to-value evolution and collections strategy, highlighting typical customer profile
- Origination trends and financing streams’ availability
Questions
1.
What’s your view on Together Financial Services, given the current macroeconomic environment?
2.
What products does Together have in its portfolios?
3.
You said that commercial lends is typically the largest. What kind of commercial projects does Together typically look to finance?
4.
Do you think Together will become a lot more risk averse to its lending in general, or is there any opportunity for it to remain normal, given the macroeconomic environment?
5.
How quickly do you think Together can adjust rates?
6.
What proportion do you think is fixed vs flexi in Together’s current portfolio?
7.
Could you expand on buy-to-let, development finance, bridging loans, commercial loans and resi mortgages? What’s the variation in splits on fixed vs flexi across those five?
8.
What’s the typical fixed-rate terms a customer is offered? Is it two years?
9.
Did Together notice a bounce in mortgage origination when the stamp duty holiday was enacted over the pandemic?
10.
We’re entering a higher-rate environment, as high street banks are now offering mortgages of 6%-plus in some cases. How do you think that’s going to feed through to Together’s book?
11.
What are the typical loan-to-values across buy-to-let, development finance, commercial, bridge and resi?
12.
What are the typical customer profiles that Together has been lending to over the past 5-6 years?
13.
How should we think about affordability and defaults, given the moving rates?
14.
Traditionally, speciality finance in general has had a lower credit quality. What do you think could happen to Together’s NPL [non-performing loan] side of the book in a worst-case scenario?
15.
After the Global Financial Crisis, around 90% of loans that Together made in 2008 were re-possessed, and the recovery rate was around 88% on these re-possessed loans. Do you think there could be a scenario where these figures potentially occur again in 2023? Do you think you’d get similar metrics this time?
16.
What could happen to the bridge loans that Together has that may not be able to win financing in the next couple of years?
17.
What goes behind the fee in Together’s loan-to-value KPIs? Is it always RICS [Royal Institution of Chartered Surveyors] valuation appraisal or does the company have some discretion on that number? Is there a possibility it could be inflated in any way?
18.
How are repossessions managed by Together?
19.
Where do you think borrowers can currently get the most competitive rates? How do you think this environment will impact speciality financing vs typical high street or retail lending?
20.
How can Together keep rates competitive? Where do you see rates trending in the next 6-12 months?
21.
Do you know what Together’s typical cost of funding is?
22.
Do you think higher high street arrears will also lead to Together and other speciality financiers becoming more attractive?
23.
Do you think Together has access to the funding streams and capacity to originate and underwrite a potential larger volume of loans?
24.
What’s the average extra cost that Together will charge on top of bank rate, or in general for the speciality finance industry?
25.
You mentioned that you think speciality finance is more risk-averse now. Where do you think Together sits on that speciality finance risk spectrum? Are there competitors who have much riskier books or less risky books?
26.
How does Together manage its assets and liabilities such as tenors and bonds?
27.
What’s a typical origination cost to Together?
28.
What is the overall cost to acquire a mortgage?
29.
What’s the distribution mix between broker vs direct mortgages?
30.
How many brokers does Together typically partner with?
31.
What’s the origination process like when using a broker?
32.
What’s the typical underwriting process for Together? What macro outlook is baked into the profile?
33.
Do you think there’s risk of more regulation on the unregulated loans? Do you think it could have a material impact on Together?
34.
New business nominal rates have decreased strongly, from 11.8% towards the end of FY15 to 6.9% in FY22. Why do you think that’s happened?
35.
How much of Together’s book does it look to securitise away?
36.
What’s your view on CEO designate Gerald Grimes and the executive management team?
37.
How has Together’s financing arm performed during other crises? Do you expect it to perform well if we enter a poor environment in the near future?
38.
Is there anything additional you’d like to highlight regarding Together?
