An Post’s mortgage plan at risk of becoming dead letter

David McRedmond’s confirmation this week that the Government has offered him a three-year extension to his An Post contract would seem to finally draw a line under the speculation about his future. The chief executive of the postal operator told reporters on Thursday that he expects to sign the deal to keep him in situ after his initial contract expires later this year.

While the work ahead of him at An Post would appear to be dwarfed by the increasingly daunting-looking in-tray facing Kevin Bakhurst, who ultimately beat McRedmond for the post of RTÉ director general earlier this year, it still looks to be a formidable set of tasks.

Later this year, An Post will enter what McRedmond described as a “planning phase” as it looks to draw up a new five-year strategy. The details are yet to be worked out but the broad contours of this new phase in the group’s transformation have been well signalled.

According to McRedmond, An Post wants to become a “digicorp”, improving its digital offering to tap into the growth of ecommerce deliveries against the backdrop of declining letter postage. It also means extending An Post’s “reach in financial services”, he said. Although An Post’s financial services business grew 14 per cent last year, getting its mortgage offering off the ground will be key to future growth, a task with which the group has fairly struggled.

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An Post was left with egg on its face last year when a planned tie-up with nonbank start-up MoCo to offer mortgage services came a cropper. It was the latest setback in a long-running attempt to get into the mortgage market that more or less began in 2018, when the semistate promised to introduce an offering that would undercut the existing players.

If it was difficult then, it is safe to say it is looking like an even taller order now. It is a “tricky market”, as McRedmond said this week, not least because the group wants to offer a “differentiated product” from the current crop. The trouble is that An Post still needs a partner, mostly likely to be a nonbank lender, to write the mortgages.

But soaring interest rates have hit nonbank lenders particularly hard over the past 12 months, pushing up borrowing costs for their customers and making them less competitive compared with traditional lenders.

Regardless, the former Eir Ireland chairman said this week that An Post is committed to exploring its options. “I’ve said this many times,” he said, “but it is true that I expect we’ll have news fairly soon on it.”

Without it, An Post’s mortgage offering is at risk of becoming a dead letter.