Mortgage Advice Bureau (Holdings) plc
Delivering, Growing and Innovating
H1 2024 Interim Results
Investor and Analyst Presentation
Agenda
Highlights | 3 | Summary and Outlook | |
FCA Regulation | Appendices | ||
Financial Review | |||
Strategy | 16 |
Additional Information
Unless otherwise stated, this report includes the unaudited consolidated financial information of Mortgage Advice Bureau (Holdings) PLC and its subsidiaries for the six-month period ended 30 June 2024 ("H1 2024"). All comparisons of financial and operating statistics are for the six-month period ended 30 June 2023 ("H1 2023"), unless otherwise stated
Certain numerical information and other amounts and percentages presented have been subject to rounding adjustments. Accordingly, in certain instances, the sum of the numbers in a column or a row in tables may not conform exactly to the total figure given for that column or row or the sum of certain numbers presented as a percentage may not conform exactly to the total percentage given
Highlights
Operational highlights
Mainstream adviser numbers1
Post period end:
1,945 +2%
30 June 2024: 1,908
30 June 2023: 1,921
Market share of new mortgage lending2
8.2% +0.1pp
Revenue per mainstream adviser
£65.3k +9%
H1 2023: £59.8k
New mortgage completions3
£9.1bn +1%
Protection and GI revenue %
39.4% +1.2pp
H1 2023: 38.2% of revenue
Total mortgage completions3
£12.1bn
H1 2023: 8.1% | H1 2023: £9.0bn |
H1 2023: £12.1bn
- Excludes directly authorised advisers, later life advisers without a mortgage and protection license, and advisers in the process of being onboarded who are not yet able to trade. Post period end as at 20 September 2024 compared to 30 June 2024
- Based on first charge mortgage completions, excluding secured personal loans (second charge mortgages), later life lending mortgages and bridging finance
- First charge mortgage completions. New mortgage completions exclude Product Transfers. Total mortgage completions include Product Transfers
Financial highlights
Revenue | Gross profit margin | Adjusted EBITDA1 | ||||||
£123.9m | +5% | 30.4% | +2.4pp | £13.8m | +31% | |||
H1 | 2023: £117.5m | H1 | 2023: 28.0% | H1 | 2023: £10.5m | |||
Adjusted fully diluted EPS1 | Proposed interim dividend | Adjusted cash conversion1 | ||||||
14.8p | +26% | 13.4p | 119% | -12pp | ||||
H1 | 2023: 11.8p | H1 | 2023: 13.4p | H1 | 2023: 131% |
1. Adjusted EBITDA, Adjusted fully diluted EPS and Adjusted cash conversion are calculated as per the Additional Performance Measures 'APMs' detailed within the Appendices
MAB H1 2024 mortgage performance v H1 2023
Q1 2024 | Q2 2024 | Q3 and Q4 2024 outlook | |
Rush to secure lower mortgage rates. | New business plateaued as mortgage | New activity has increased post-election | |
Demand brought forward | rates pushed back up | and BoE rate cut | |
New mortgage applications1 | +20% | -1% | • Easing mortgage rates and real wage |
growth is improving affordability | |||
New mortgage completions2 | -8% | +11% | |
• MAB's written new case numbers are | |||
+11% YoY in July & August vs. the same | |||
MAB market share3 | 8.1% | 8.2% | time last year |
• Pent-up purchase demand and large re- | |||
Fixed mortgage rates are | financing opportunity exists | ||
easing as SWAP rates fall | • Pipeline larger than this time in 2023. | ||
Record level of mortgages available | |||
(23.5k v. 17k in 2023) | |||
• UK political risk premium abating. | |||
Mid/long-term Government commitment | |||
to housebuilding and owner occupation = | |||
tailwind | |||
- Written mortgage procurement fees, excluding Product Transfers
- Lending by value, excluding Product Transfers
- Share of new mortgage lending based on first charge mortgage completions, excluding secured personal loans (second charge mortgages), later life lending mortgages and bridging finance
Mortgage lending market completions
Gross new mortgage lending
25,000
20,000
15,000
£m
10,000
5,000
-
Commentary
Gross new mortgage lending of £111bn (excluding Product Transfers) up 1% on H1 2023
vs. H1 2023 | |||
Purchase | +8% | ||
Home-mover | +5% | ||
First time buyers | +11% | ||
Buy-to-let purchase | Flat | ||
Re-mortgage | -8% | ||
Residential re-mortgage | -11% | ||
Buy-to-letre-mortgage | +3% | ||
Buy-to-let | +2% | ||
Product Transfers | -2% |
First Time Buyers Home-owner Movers Home-owner Remo BTL Purchases BTL Remo Other
Source: UK Finance. Chart includes further advances and lifetime mortgages, excludes product transfers
FCA Regulation
FCA - Pure protection market study
Market study
Commissions
- Do current commercial structures work?
- Do current structures encourage 'commission bias'?
- Do intermediaries set pricing & commission?
Policy Premiums
- Do they provide value (e.g. relative to potential policy benefit)?
- Loaded premiums (can extra value be demonstrably evidenced, and fair value attributed?)
Claims
- What % of claims are paid out to customers by insurers?
- What % of total premiums goes towards paying claims?
MAB's position
- MAB's 48 month clawback period aligns adviser & customer interests
- MAB ensures zero commission bias for advisers through flat commission structure per insurer and per product line
- Insurers determine both pricing and commission
- The limited level of loading remaining continues to decline without compromising its current contribution to customer outcomes
- Whilst pricing is determined by the insurers, MAB has its own product governance processes in place to assess the target market and fair value of products
- Pricing can fluctuate according to appetite for MAB's panel
- MAB performs very well against its intermediary peers in terms of customer outcomes
- 95+% of MAB customer claims are paid promptly by panel insurers
- On average across MAB's panel 50-55% of policy premiums go towards the payment of claims (similar to top quartile for GI)
FCA - Pure protection market study
Market study | MAB's position |
Over 50s Products (Guaranteed Acceptance) | |
• Is there a clear 'insurable interest'? Do policies offer fair | • MAB does NOT offer guaranteed acceptance over 50s plans |
value? |
- Customer vulnerability?
Non-advisedsales/execution-only
- Does this result in good customer outcomes?
Market competition
- Why do the top 5 insurers account for 70-80% of the Pure Protection market? Do distribution chains work effectively?
- MAB does NOT offer execution-only. ALL customers receive advice
- MAB would welcome more competition and innovation to enhance customer outcomes further
Investment in training and support for advisers leaves MAB well positioned in this market, and well placed to bring new ARs into the network if regulatory intervention catalyses consolidation