MFG Generates Strongest Group Profits in Over a Decade

Manx Financial Group’s Executive Chairman, Jim Mellon, has announced that the Group’s latest set of interim results have shown the “strongest half-year pre-tax profits for more than a decade.”

?Profits for the six months ended 30th June 2022 were more than double the figure reported for the same period in 2021, in figures released to the London Stock Exchange earlier this week.

?In his shareholders’ statement, Mr Mellon commented on the Group’s robust financial position. “I am pleased to report that at ￡2.3 million, the Group had its strongest half-year pre-tax profit for over a decade, being a 105% increase over the ￡1.1 million for the same period last year.” ?

?However, he warned that inflationary pressures and central bank interventions still continued to be a negative influence on the global economy and that the Isle of Man and the UK were not immune. But, he said the Group was well-placed to handle these uncertainties. “I believe that our diverse portfolio of financial services companies provides a level of insulation during these difficult times, not afforded to many of our competitors,” he remarked.

?Furthermore, the strength of the Group’s Balance Sheet provided the opportunity for further selective acquisition and a continuation of a strategy of vertical integration, “by taking significant positions in specialist lending introducers,” he continued.

??A well-placed Group

?As revealed in the results, total Group assets have increased by 12% - from ￡283.7 million in 2021 to ￡317.7 million in 2022 - whilst deposits have increased 10% from ￡231.2 million to ￡253.6 million. ?

?Mr Mellon stated that the bulk of Covid-related delinquencies had now passed and by optimising the headroom available in its loan-to-deposit ratio, the Group “was well-placed to enter into the anticipated recession.”

?Referring to the current economic headwinds, in relation to Conister he said the Bank had participated in both the Isle of Man and UK Governments’ business support schemes and that it had applied to continue in the UK Government’s extension of the Recovery Loan Scheme. ?Alongside this, the Bank had invested in its UK Structured Finance portfolio, providing further protection from additional credit enhancements by Finance Intermediaries, he explained.

?As a result, the Bank had seen strong growth of 53.7% - up from ￡30.34 million in 2021 to ￡46.7 million currently. “This has been identified as a safe market segment for the Bank to grow its loan book sustainably, whilst protecting the Bank against defaults,” observed Mr Mellon, adding that the pursuit of a prime customer base over the last 18-months had also positioned Conister well for a recession-proof loan book.

?With regard to the other operating subsidiaries, Mr Mellon said the Group was fortunate “to have a highly motivated group of executive directors whom we can depend upon to maximise their business’s opportunities within our agreed risk profile in this difficult market.” ?

?He singled out the performance of the Group’s foreign exchange advisory business, which continued to go from strength-to-strength with an impressive first-half profit, at the same time noting that all other operating subsidiaries had traded profitably in the period under review. ?

?Acquisition Strategy remains on Track

?He said the stated 2022 strategic priorities remain unchanged and that further acquisitions were on the cards. “One of the priorities is for the Group to develop its core business by considered acquisitions that could help accelerate shareholder value by addressing our discount between Net Asset Value and our market capitalisation,” Mr Mellon confirmed.

He said the economic environment had allowed the Group to develop its acquisition strategy, adding: “I fully expect we will continue to acquire strategic shareholdings in other financial service businesses in the coming months.”

?He said recent acquisitions in Payment Assist Limited, Blue Star Business Solutions Limited, Ninkasi Leasing & Rental Limited and The Business Lending Exchange Limited had all had an incremental effect, stating: “We will continue to focus our efforts in identifying other acquisitions in niche, resilient markets.”

?Reflecting on the economic challenges that lay ahead, he said he had every confidence in the Group’s ability to successfully weather a period of market volatility and uncertainty. “Our banking division continues to have a strong demand for its structured finance products in sectors that have proved resilient in recent years,” he highlighted.

?Mr Mellon said this would not only be funded by “our loyal Isle of Man deposit base but also through new sources of liquidity, to further diversify the funding of this substantial lending pipeline.”

Market volatility would also continue to benefit the Group’s foreign exchange advisory business and although this would be less beneficial to the IFA operation, he still expected the net effect on both those businesses to be positive.

“In summary, we are well positioned to grow both organically and through acquisition, despite the challenging economic headwinds,” he concluded. ??