Together Financial Services reports Q3 loan book reaches £8.4bn By Investing.com

Together Financial Services reported loan book growth of 7.6% year over year to £8.4 billion and underlying profit before tax of £60.8 million, up 5.7% from the prior quarter and 2.5% sequentially. Asset quality improved, with arrears falling to 4.5% from 5.6% in Q3 2025, while the weighted average LTV remained conservative at 61.4%. The quarter also included multiple funding transactions, including a £542 million CRE MBS, a £300 million second-lien note issue due 2032, and a £528 million RMBS.

Analysis

The key read-through is that this lender is monetizing a still-favorable spread environment while keeping underwriting relatively disciplined, which should support funding-market confidence more than pure equity upside. The combination of improving arrears and sub-2% annualized credit cost suggests asset quality is not deteriorating despite a more fragile UK property backdrop; that matters because specialist lenders tend to reprice faster on downside than banks, so stable losses are the main catalyst for multiple support.

Second-order, the securitization cadence is the real signal: repeated term takeout into RMBS/CMBS structures lowers balance-sheet intensity and should free capacity for further origination without forcing margin compression. That can be a competitive advantage versus smaller private-credit originators that lack repeat access to public ABS markets, but it also means spreads at the deal level become the key swing factor—if funding markets wobble, loan growth can decelerate quickly even if demand remains intact.

The contrarian angle is that improving arrears can tempt investors to extrapolate too far in a late-cycle property lending book. A modest move up in UK rates or a cooling in commercial real estate valuations would pressure indexed LTVs before headline arrears show it, so the equity is more sensitive to collateral mark-downs than to near-term PBT growth. Over the next 3-6 months, the main risk is not earnings miss but a funding-spread shock that compresses NIM and stalls growth.

For relative value, this is more attractive as a capital-structure story than a straight long-equity call: the bond stack looks better insulated if origination continues and securitization execution remains open, while equity is exposed to any normalization in credit or property prices. In short, the market should reward the funding franchise, but the asymmetric upside probably sits in the debt rather than the common stock.

Key Decisions for Investors

• Prefer long exposure to the lender's senior secured debt or RMBS/CMBS paper over the common equity for the next 3-6 months; thesis is lower-volatility spread income with tighter downside if UK property prices soften.
• If liquid, buy protection / short UK regional property lenders or specialist mortgage originators that lack securitization access; pair vs a better-funded originator should work if credit markets tighten over the next quarter.
• Consider a relative-value long in higher-quality UK bank debt versus this credit if ABS spreads widen 25-50 bps; the name is more dependent on capital-markets access than deposit-funded incumbents.
• For equity traders, wait for a pullback or spread-widening event before going long; risk/reward is better after any funding-market volatility, with a stop if securitization execution stalls for one reporting cycle.