Pepper revenues slip due to Covid but profits still stable

Non-bank lender also reports a dip in assets under management last year

Pepper Ireland last week announced plans to recommence commercial lending

Pepper Ireland last week announced plans to recommence commercial lending

 

Pepper Ireland recorded a slight decline in revenues last year to €50.1 million from €52.8 million due to the impact of the coronavirus pandemic.

This is in sharp contrast to 2019 when revenues jumped 25 per cent to €52 million on the back of an increase in the number of loan portfolios it services.

A breakdown of revenue shows €46 million in turnover came from servicing fees.

The non-bank lender, which has mandates to service a number of portfolios previously owned by Irish banks, reported a slight rise in pre-tax profits last year from €13.1 million to €13.8 million.

Net assets also increased, up €6.9 million to €24.6 million driven by profits less a €5.4 million distribution made to its parent. During the year and as part of a wider group restructuring, the company received a distribution from subsidiary Pepper Finance (H73) Limited totalling €2.4 million.

Lower overall activity resulted in assets under management decreasing slightly to €17.4 billion from €18 billion a year earlier.

Among other wins, Pepper last year secured a mandate to service Glenbeigh II, a €1.4 billion buy-to-let portfolio originated by PTSB.

Pandemic

“Despite the continued impact of the Covid-19 global pandemic, the directors are confident in the outlook for the company’s servicing business based on the recent mandate wins and being a solutions and outsourcing partner to Irish banks,” Pepper said.

“The directors are focused on continuing to grow and develop the business in Ireland and to establish Pepper as a leading loan servicing and real estate asset management operation,” it added.

Pepper employed 496 people at the end of 2020, up from 447 in the prior year. Staff costs, including wages and salaries, totalled €39.4 million, down slightly on the €40.7 million recorded in 2019.

The group last week announced plans to recommence commercial lending due to more favourable market conditions and new opportunities in the Irish market. Trading as Pepper Money, the lender announced it was to cease offering new mortgages to commercial customers following a strategic move last September. However, it has now said it will advance loans to projects ranging in value from €250,000 to €9.95 million.

Pepper is a subsidiary of the KKR-owned Australian financial services group. The sale of the group’s Irish business to Link Group was terminated earlier this year, after the Australian financial services administrator pulled out of the proposed €200 million deal.