The Housing Finance Corporation has today published its half-year accounts showing that significant lending activity has contributed to a marked increase in pre-tax surplus.
In the first half of the 2020/21 financial year, pre-tax surplus across the group was £3.4m, compared with £1.8m for the same period last year. This growth was chiefly driven by significant new lending volumes between March and September totalling £293m.
The main thrust of new business was in bLEND (A2: Moody’s), a subsidiary vehicle set up in 2018 to provide housing associations with quick and flexible access to long-term capital markets funding. With an initial target of lending £500m across 5 years, bLEND has to date issued over £800m in just two years. In October bLEND issued a further £250m, nearly half of which was on a deferred basis, in what is believed to be the first transaction of its type in the sector.
The six-month period covered by the interim report has been marked by considerable market volatility, due to both the ongoing impact of the coronavirus, and political uncertainty stoked by the US presidential election and the question mark over the possibility of a UK-EU trade deal before the transition period ends in December. Housing associations demonstrated resilience in the face of such challenges, and so although the UK Sovereign was downgraded in October, Moody’s did not read this across to downgrade to the sector.
The more recent launch of the new Sustainability Reporting Standard, which THFC has signed up to, served as a reminder of the future challenges facing the sector in relation to fire safety, stock retrofit and cross-subsidy development models. Many associations have chosen to access funding through the THFC Group as the largest mutual lender to the sector, and it is this new business which has driven the growth in pre-tax surplus. As a result, the group’s reserves stood at £44.4m on 30 September 2020, up from £39.5m this time last year.
Piers Williamson, CEO of THFC, said “THFC has been meeting the funding needs of housing associations for over 30 years, and the secret of our success is our close and established relationships with the sector. In the last six months we’ve not only delivered significant growth, but also innovation on modular homes as security and deferred drawdown through bLEND, so that housing associations can access low-cost funding on terms that suit them.
Despite an incredibly tough year, associations have moved mountains to continue to provide for their communities. Today’s news is a great success for THFC, but more importantly it’s a testament to the commitment of the sector to rise above adversity and fix Britain’s housing crisis, brick by brick.”
THFC is a proud sponsor of this year’s Centre for the Study of Financial Innovation’s (CSFI) Banking Banana Skins report,.
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