Pepper’s profits in Ireland rise after securing new loan mandates

The Irish unit of listed Australian non-bank lender Pepper increased its pre-tax profit last year to €8.4 million, having launched a residential mortgage offering and secured more loan servicing contracts.

Accounts filed by Pepper Finance Corporation (Ireland) show that it increased its pre-tax profit by 31 per cent last year, with revenues rising to €45.6 million from €37.8 million a year earlier.

Pepper originated €27.6 million in residential mortgages last year, having launched its home loans offering in January 2016. The company said this was in “line with expectations”, although it only represented a tiny share of the overall Irish mortgage market, which was valued at about €6 billion in 2016.

The mortgages were initially offered via brokers but are now also being sold directly under the Pepper Money brand. The company said it has "continued to experience positive momentum and growth into 2017".

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“Since year end, Pepper Money has gone on to expand into commercial lending, with the launch of new mortgage products aimed at a range of commercial property and professional buy-to-let borrowers wishing to refinance loans or acquire new commercial properties,” the directors report stated.

"The directors are focused on continuing to grow and develop the business in Ireland and to establish itself as a leading lender, loan servicing and real estate asset management operation."

Pepper, which is led by chief executive Paul Doddrell, also increased its assets under management last year to €17 billion from €14 billion a year earlier.

In May, Pepper secured an appointment from Goldman Sachs to provide servicing on "Project Cypress" – a buy-to-let portfolio worth €400 million that was sold by AIB.

On the expenses side, administrative costs rose by 21 per cent to €39 million. Staff numbers rose to an average of 405 last year, up from 308 during 2015, as it expanded its activities.

Its bill for wages and salaries rose by 22 per cent to €28.2 million, while it paid €1.9 million for consultancy services in the year.

Last year also saw Pepper make its first external appointments to the board, with Andrew Hastings, the former head of Barclays in Ireland, becoming a non-executive director. Kieran Desmond was appointed as a non-executive director in April 2017.

The Irish company is a subsidiary of Pepper Group, a listed company in Australia. On July 5th, Pepper announced that private equity group KKR had made an AU$650 million (€441.75 million) offer for its business. Pepper remains in exclusive discussions with KKR on the proposed deal.