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Pepper Profits Soar Thanks to Gains From Home Loan Selling

Pepper Ireland, which sold its € 200million residential mortgage portfolio at the end of last year, has announced a huge increase in its pre-tax profits for 2018.

The company said its pre-tax profits jumped to € 16.7 million in 2018, from € 5.6 million a year earlier. Turnover amounted to 42.3 million euros compared to 40.6 million euros. Pepper is a subsidiary of the Australian Financial Services Group which is now part of the KKR private equity group.

The increase in profits is explained by the increase in interest income, a gain of 8.6 million euros resulting from the sale of the residential mortgage business and a dividend payment of 6.7 million euros. euros from its subsidiary.

Pepper, whose parent company employs more than 1,700 people worldwide and manages over € 36 billion in assets under management, entered the Irish residential mortgage market in January 2016. Its decision to sell the portfolio last year at Finance Ireland was linked to a larger plan for the group to expand its loan management business in Europe.

The group, which first entered the Irish market after acquiring the share capital of GE Capital Woodchester Home Loans in September 2012, continues to market and promote commercial mortgage products under the Pepper Money brand.

Last year, it originated 85 million euros in commercial loans against 13 million euros in 2017.

The company’s Irish loan management business, Pepper Asset Servicing, saw a slight decline in assets under management last year to € 15.8 billion from € 16.1 billion. While the unit saw weaker growth than in previous years, it said it was very active in the last fourth quarter, adding three new portfolios in a move that increased assets under management by $ 2.4 billion. ‘euros.

Pepper’s total income for the year ended December 2018 amounted to € 14.8 million, compared to € 1.08 million in 2017. Operating income was down to € 701,913 compared to 2 , 7 million euros over the 12 months, due to an increase in administrative costs linked to a recruitment campaign. . The company employs around 400 people.

Equity increased to 53 million euros last year, compared to 39 million euros in 2017.

“The positive performance recorded in 2018 reflects the continued momentum of our business, but also the changing profile of the company as we moved away from residential lending to focus on developing our loan and loan management activities. commercials, ”said Pepper CEO Cormac Ryan.

“While 2018 was a year of transition, we continued to win significant new service mandates totaling over € 6 billion over the past 12 months,” he added.

This includes servicing over 6,200 non-performing loans sold by the permanent TSB at the end of last year.

At the end of 2018, Pepper said he managed more than 8% of outstanding residential mortgages in the Irish market, the majority of which he said were performing loans.