Manx Financial Group - Strong H122, well positioned for macro headwinds
Manx Financial Group (MFG) had a strong H122, with a PBT of £2.3m more than doubling and a return on average equity (ROE) of 16.8%. Loans grew 16% as the group continues to reposition itself into prime lending segment ahead of the more challenging macroeconomic environment. The net interest margin improved to 8.9% (8.5% in H121) and impairments remain under control with an annualised charge of 1.9% (2.1% in H121). Conister Bank (MFG’s bank) has formally applied for a UK branch deposit-taking licence on 25 October. This will give this Isle of Man bank a greater foothold in the UK for growth. The balance sheet is well capitalised (total capital 17.7%, CET1 of 14.2%) and still carries surplus liquidity to fund expansion plans. The bank is trading at an FY21 P/BV of only 0.8x despite its track record of ROE being above its cost of equity (COE, which we estimate at 10–11%) and ability to expand its balance sheet.Manx Financial Group is a holding company. Through its subsidiaries, Co. is engaged in the provision of asset and personal finance, investing activities and wealth management. Co. operates four product segments: Asset and Personal Finance (including provision of hire purchase contracts, finance leases, personal loans, commercial loans and block discounting); Litigation Finance; a Prepaid Card division, Conister Card Services; and a Wealth Management division. As of Dec 31 2012, Co. had total assets of £77,978,000 and total customer deposits of £62,731,000.
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