In a statement to the Stock Exchange, it announced profits would be below expectations in the years to come and that chief executive John Maltby had left the company, with current managing director of Kensington Mortgages, Alison Hutchinson, being promoted to the role.
However, Mark Sismey-Durrant, chief executive of Heritable Bank, believed this was the first indication of the pressures on lenders in the non-conforming market.
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“It shows how competitive the market is right now and you have to worry, with the structure of the company, there is not a lot of scope to absorb big losses. As with any company, you cannot have too many profit warnings before investors start worrying about the future of the company.”
Linda Will, managing director at Accord Mortgages, also had concerns over what was happening at the firm.
“Kensington is quite unique and was the first big non-conforming lender but its associated funding and its profitability model are suited to when the sector had high pay rates. It has also been late in adopting technology and I think it misjudged the impact it would have on the sector.”
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However, Ian Giles, director of marketing at Kensington Mortgages, believed everyone was finding it tough but its plc status meant it had to be more open than everyone else.
“It’s fair to say that the current market conditions in the specialist sector are as competitive as they have ever been and all lenders need to make sure they have the business plan in place to make money and be at the top of their game. However, as one of the most visible companies because of our status on the FTSE, we have to be more open and transparent about our business than others have to be.”
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Clare Mortimer, press officer at BM Solutions, also warned against pre-empting the market:
“We should avoid scaremongering. Specialist lenders know what they are doing, price by risk and understand the market. It is competitive, but this is one business and not the tip of the iceberg.”
