Finance Ireland doubles mortgage lending as broker channel grows in influence

Billy Kane, CEO of Finance Ireland. Photo: Fennell Photography

Jon Ihle

Finance Ireland doubled the amount of residential mortgage business it wrote in 2021 as the firm introduced Ireland’s first 20-year fixed rate home loan.

The non-bank lender, which also specialises in motor finance and commercial mortgages, trebled its pre-tax profits to €28m during the year on significant volume growth and the release of Covid-19 provisions.

The company’s latest accounts show it did more than €1bn in new lending during the year, an increase of 54pc over 2020 and the first time it crossed the billion mark in a single year.

Half of that business was in home loans and Finance Ireland now commands a 5.3pc market share, with a 13pc share of the growing broker channel, which now accounts for half of new mortgages written in Ireland.

Finance Ireland had targeted new mortgage origination of €300m-€450m in 2021, according to founder and CEO Billy Kane, but exceeded the top end of that range by doing €552m in business.

“2021 was a record year for the group and demonstrates the ongoing strong demand from businesses and consumers for a fresh approach to lending,” said Mr Kane, whose remuneration nearly doubled to €841,000 after a substantial pandemic pay cut in 2020.

“Despite the ongoing impacts of Covid-19, the business performed strongly and our capital raising in 2022 leaves us exceptionally well placed to fund continued growth across the business.”

Finance Ireland raised €50m in fresh equity in series of transactions in July that saw its debt-backer M&G Investments and long-term shareholder Pimco buy out the Irish Strategic Investment Fund (ISIF) and about 120 legacy investors.

ISIF exited its 33pc stake in the firm for nearly €70m - about a 50pc return – leaving M&G with 41pc, Pimco with 49pc and management holding 10pc.

The deal, which came together in lieu of a postponed May 2020 stock market flotation, valued the firm at close to €260m, underscoring Finance Ireland’s strong position as Ireland’s biggest non-bank lender.

M&G had already funded the company’s foray into long-term fixed products in the first half of 2021 – perfect timing in light of the surge of inflation and rising interest rates that followed this year – and followed its money with a substantial equity investment this year.

Despite tightening monetary conditions and the increasing cost of living, mortgage lending has remained buoyant and is on track to exceed €10bn in 2022 amid strong demand for houses in an undersupplied market.

Moreover, the exits of Ulster Bank and KBC Bank Ireland from the domestic market has left about 25pc of the mortgage market up for grabs, with increasing flow going to non-banking lenders via influential brokers.

“While we are conscious of the economic challenges arising from sharp increases in the cost of living and energy prices in particular, the Irish economy has demonstrated exceptional resilience both during and after the pandemic and we remain confident about the opportunities that exist,” said Mr Kane.

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