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The Sub Prime lender London Scottish has announced it’s results today. It reports Mortgage and Secured lending business up 42.5%. But it also says :-

“London Scottish Broking has been increasing its mortgage broking volumes throughout the first half and has increased the number of leads it places with the Group’s secured lending business. It has also continued to reduce its cost base in order to improve its financial performance. However, further restructuring of the business is required to return it as a positive contributor to the bottom line. Consequently, we shall be taking further steps in the second half to improve the efficiency of the business.”

So business going up like crazy, but not contributing to the bottom line as much as it should. One wonders whether they haven’t got the systems in place to cope with the huge growth in demand. Perhaps they didn’t change the infrastructure enough as they moved away from unsecured business - I can only make an educated guess!

I’m also a bit confused by some of the statements below. They say there’s been a big growth in the Specialist Mortgage business and Secured Loans and then report :-

“Profit before taxation for the division increased to 2.1m (2005: 1.5m) whilst receivables grew to 222.5m (2005: 186.2m) largely driven by the growth in the mortgages and secured business. Our Secured Broking division has continued to operate in extremely tough market
conditions during 2006 with third party commission income down 3.8m to 2.9m”

It’s a shame that elsewhere in their results then don’t split out the Secured Loans business from the other business. In the ’sales’ figures the Secured Loans business is clumped in with other sales.