The improvement was achieved by a considerable reduction in provisions made for bad debts. The future continues to look good for the company, according to analysts, as profit gains resulting from reductions in bad debts are likely to diminish as the company completes the process of shaking out the lowest-quality mortgages.
Trading conditions in the depressed housing market looked set to worsen as interest rates rise, Jonathan Perry, chairman, warned. Despite this concern, Chris Smith, analyst at the company's broker, James Capel, stuck to his full-year profit forecast of pounds 15m following the completion of a financial restructuring at NHL and the launch of a pounds 50m rights issue earlier this year.
"It is a low-cost producer of mortgages," he said. "The quiet market conditions help it because its mature loan book will reduce less slowly than others."
Shares in NHL plummeted from a high of pounds 23.29 in 1987, when it was one of the country's largest mortgage brokers, to a low of 12.5p in 1992 after the BCCI crisis and the collapse of the housing market sent the independent mortgage market into a downward spiral.
Since the appointment of Mr Perry in 1992 the company has struggled to restructure itself and, despite offering relatively expensive mortgages, has begun rebuilding its loan book.
Net interest income for the half year fell by 22 per cent as mortgages were redeemed, but Mr Perry hopes the outflow of funds will be reversed in the next two years.
Operating expenses increased by nearly pounds 1m, due to one-off costs associated with the restructuring, NHL said.The shares closed up 9p at 115p./
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