Kensington Profits Hit by Competition ; BUSINESS
Moore, James, The Independent (London, England)
Shares in Kensington Group plunged yesterday as the specialist mortgage lender admitted its profits were being squeezed by "intense" competition from both established and new rivals.
Kensington was also hurt by fresh concerns over house prices sparked by influential Morgan Stanley economist David Miles, who voiced fears of falls in the next two years. The com-pany's shares tumbled 100p to 805p, making it the biggest faller in the FTSE 350 index of Britain's biggest companies.
Kensington specialises in the sub-prime home loan market - people, such as the self-employed or those with poor credit histories, who are shunned by mainstream lenders.
High street banks once steered clear of them, but have increasingly been entering the market because of the high profits it offers. A number of investment banks have also moved in.
Kensington said this meant that this year's earnings would be towards the bottom of analysts' forecasts, while profit growth next year will fall.
The company, however, said that for the 11 months to the end of October, new business completions rose to [pound]3.7bn, up 19 per cent.
Its chief executive, John Maltby, said: "Clearly at the half- year people were concerned about credit but credit quality is very encouraging and impairment charges are falling.
"We do not lend at high income …
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Publication information: Article title: Kensington Profits Hit by Competition ; BUSINESS. Contributors: Moore, James - Author. Newspaper title: The Independent (London, England). Publication date: November 23, 2006. Page number: 57. © 2009 The Independent - London. Provided by ProQuest LLC. All Rights Reserved.
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