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Manx Financial Group
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==H121: Resilient profitability, good loan momentum== MFG reported £1.03m in earnings for H121, up 3% year-on-year, but down 17% compared to H119 before the pandemic. ROE was 8.9% (9.0% in H120), which is a relatively resilient figure given the COVID-19 challenges. Impairment charges were 2.1% of average loans, but this ratio is stable compared to the two previous periods: 2.1% (H120) and 2.2% (H220). Stage 3 loans declined as a percentage of net loans from 10.6% (FY20) to 8.3%. Impairment coverage of stage 3 was 52.6%. This is significantly lower than the 85.6% at the end of H120, but stable compared to the end of 2020 (51.5%). For comparison, the latest data from the European Banking Authority (EBA) showed average stage 3 coverage in Europe in FY20 at about 47%, while most of the larger UK banks have coverage ratios below 50%. The loan book grew 16% year-on-year. The net interest margin was 8.5% of loans versus 8.7% in H120 and 11.2% in H119. The tighter margin reflects the repositioning of the loan book away from subprime, while rising interest rates will help margins going forward. Total revenue grew 6% year-on-year, but core operating revenue grew 12%. The H120 total revenue figures had been bolstered by gains on securities and asset revaluation. Operating expenses also grew 6% y-o-y and the group’s cost to income ratio remained stable at 65%. Conister’s total capital ratio fell from 19.3% in FY20 to 17.8% due to a strong increase in the loan book in H121, but its capital remains ample.
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