Investec has issued a profit warning for Kensington Group following recent money-market volatility.
In a statement to the stockmarket, Investec says Kensington will tighten its lending criteria, increase pricing and alter the mix of its product offering.
It says a consequence of this strategy will be lower volumes, an alignment of infrastructure and improvement in margin.
“We would expect lower profitability from our initial projections for Kensington until market conditions normalise,” says the statement.
It says that lines and facilities are in place to support this strategy including non-recourse warehousing lines from third-party banks and committed forward-flow agreements with other financial institutions.
Kensington’s mortgages under management have fallen from 7bn to 6.6bn while weighted average loan to values have improved from 71 to 69 per cent since March 31.
Investec group managing director Bernard King says: “The growth momentum experienced in our markets over the last four to five years is likely to be tempered over the short term as the global financial services industry takes time to adjust to recent adversity. Our strategy will be to consolidate our position and create additional operational efficiencies while continuing to grow in areas where opportunities present themselves.”