Charter Court signals ‘confident’ outlook as profits jump and it announces maiden dividend
Buy-to-let lender Charter Court reported a big jump in profits today and its first dividend less than a year after its initial public offering.
Profit before tax rose by 57 per cent year-on-year to £93.1m for the first half of 2018, almost reaching the £111m profit made for the entirety of 2017.
Charter Court listed in September last year as owner Elliott looked to cash in on some of its stake. Elliott owns 38 per cent of the bank, which has a market capitalisation of around £800m.
The specialist bank has enjoyed strong growth in recent years, after being started a decade ago in the teeth of the financial crisis, as demand in the buy-to-let mortgage market has remained strong in spite of tax changes.
The bank’s loan book expanded by more than £1bn year-on-year to reach £5.7bn, a 29 per cent increase. The bank expects loan growth of around 20 per cent in the coming years, said chief financial officer Seb Maloney.
The firm has raised its targets for mortgage origination from £2.5bn to £2.7bn for the year.
Ian Lonergan, chief executive of Charter Court, said: “Balance sheet growth has got some way to go in the coming years.”
The bank’s cost to income ratio came in slightly above expectations owing to the increased costs of being a public company.
The declaration of a 2.8p per share dividend is a “positive sign and one that supports our confidence in this year and future years”, Lonergan said.
While confident on the firm’s finances, Lonergan acknowledged the macroeconomic outlook is clouded as the UK approaches its exit from the EU and the housing market shows signs of softness.
“I don’t think we’re insulated from that,” said Lonergan. “Every bank in the country is risk-aware and cautious.”
However, he added that nothing in the bank’s current risk indicators suggests massive danger ahead, and pointed to conservative lending criteria. Only three of Charter Court’s 55,000 loans so far have lost money, Lonergan said.
Shares rose by two per cent at the time of writing.