Export opportunities and risk in the Polish market

Polish exports are expected to see a sharp rebound this year, reports the latest trading update by leading trade credit insurer Atradius.

In the Poland Country Report, Atradius forecasts exports will rise by as much as 9% in 2021 more than compensating for the 1.9% contraction in 2020 and supported by resurging demand from the Eurozone. Imports into Poland are also expected to rebound by nearly 10% in 2021 after a drop of nearly 5% last year.

The Polish report is part of a series of country, economic and trading reports by Atradius to support businesses trading in overseas markets.

The economy

The report reveals Poland’s economic contraction in 2020 due to the coronavirus pandemic was 2.8%, significantly less than the 6.4% average recession of EU member states. This is due to Poland’s economic performance being less dependent on exports compared to some of its Central European peers while private consumption accounts for 58% of Polish GDP, reducing its vulnerability to external shocks. Looking ahead, the economy is forecast to rebound by 3.8% in 2021. Atradius forecasts private consumption to increase 3.5% in 2021 after decreasing by the same figure last year, sustained by increased government payments to families and pensioners alongside tax breaks while unemployment is expected to level off.

Business position

As a response to the pandemic, comprehensive stimulus measures supported many Polish businesses, enabling them to sustain their cash position. However, this support is expected to expire this year as the economic rebound gains momentum. Atradius warns this could potentially have an adverse effect on business liquidity and lead to rising payment delays and insolvencies, particularly in the sectors most affected by the pandemic such as transport, brick-and-mortar retail and services. Atradius’ latest Insolvency Forecast reports Polish insolvencies are expected to grow by 7% this year after remaining static in 2020.

Sector outlook

Atradius’ overview of key industries in Poland reports business performance and credit risk in both the consumer durables and metals/steel sectors have improved, leading to outlook upgrades from ‘poor’ to ‘fair’. In consumer durables, sales have rebounded in the household appliances and furniture segments and the outlook is also more positive due to an expected growth in household consumption. Meanwhile, metals and steel recorded a demand recovery in H2 of 2020, benefiting from restocking and resumption of production by end customers.

However, for some other industries such as construction, machines, services, textiles and transport, Atradius’ performance outlook remains ‘poor’ for the time being. The report details that while construction businesses should benefit from the planned public infrastructure investments, operating margins remain very tight, with increased credit risk mainly for smaller players. In the transport segment, the credit risk in passenger road transport and road freight transport remains high. Meanwhile, in the service industry, many segments have suffered from pandemic-related lockdown measures, particularly hotels and catering, restaurants, bars, entertainment and cultural events, tourism, travel agencies and tour operators. Despite additional fiscal support, Atradius warns that up to 30% of these businesses may not survive the pandemic crisis.

Richard Reynolds, head of strategic accounts for Atradius UK, commented: “With an established trading relationship, imports and exports between the UK and Poland increased in the four years leading up to the pandemic and, despite being shaken over the past year, there are positive signs of recovery. With a large domestic market and often seen as a gateway into Central and Eastern Europe, Poland is an interesting proposition for businesses looking to trade overseas particularly in the consumer durables and metals sectors. That said, the pandemic has introduced a significant degree of uncertainty into the global trade environment which makes the associated risks even more acute. UK businesses looking to trade overseas must ensure they adapt to these risks as well as understand the potential impact on the wider market and on their individual customers. A robust risk management strategy and protection from non-payment and insolvencies is critical.”

Second charge mortgage new business volumes stable in March 2021

Commenting on the latest new business figures for the second charge mortgage market, Fiona Hoyle, Director of Consumer & Mortgage Finance and Inclusion at the Finance & Leasing Association (FLA), said: “In March, the second charge mortgage market reported its highest monthly new business volumes since the same month in 2020. FLA members are increasingly optimistic about the outlook and we expect to see a strong rebound in demand over the next year.”

Analyst reaction available for BoE interest rates decision

With the Bank of England’s Monetary Policy Committee meeting later today to discuss interest rates, Giles Coghlan, Chief Currency Analyst at HYCM, said: “It is likely that interest rates will be held at 0.1%, but that is not to say there will not be some interesting movements to watch across the financial markets following the MPC’s meeting. If the BoE announce bond tapering, then expect the GBP and the FTSE 100 both to strengthen. Similarly, if it becomes clear that the BoE will, or is likely to, bring forward an interest rate hike, then again we should expect the GBP and FTSE 100 to perform well.

“Conversely, if no tapering is announced, or if interest rate hike projections are not brought forward, we could see a fall for the GBP and FTSE 100. However, there is an important caveat to bear in mind: while one would expect the result of the meeting to have a similar impact on both the GBP and FTSE, it is possible there will be an inverse correlation. That is to say, if the GBP strengthens significantly, this could have an adverse effect on the FTSE 100; or should sterling have a strong bearish reaction to the outcome of the MPC meeting, the FTSE 100 could see some gains.

“Should the BoE announce nothing of note, there might be a muted reaction over the coming days. Yet the reaction of the CAD to the recent Bank of Canada bond tapering offers a useful near-term comparison of what could happen. Likewise, the movements we’ve seen in shares as a result of speculation that US rates will rise soon also shows us what could be in store in the week ahead.”

Countrywide Surveying Services appoints Senior Technical Manager for Risk and Compliance

Countrywide Surveying Services (CSS), one of the leading suppliers of valuation panel management services, has announced the appointment of Ana Bajri as a Senior Technical Manager for Risk and Compliance.

Ana will be responsible for ensuring that services to customers and corporate clients are of the highest standard, as well as driving sustainable growth and success in a suitably risk controlled way while optimising the customer journey.

Key areas of focus within the role include:

  • Survey standards
  • Sustainability
  • Desktop valuations
  • Innovation and products

Prior to this appointment, Ana held a number of roles at the Royal Institution of Chartered Surveyors (RICS) over the past nine years. Most recently, she was an Associate Director in the International Standards team at RICS where she was responsible for the development of technical standards and best practice guidance for professionals operating in the real estate sector. In this role, she led the development of residential and commercial sector standards, technical guidance and associated supporting solutions for residential surveys, building operation/facilities management and sustainability.

Ana also sits on a number of industry groups and is currently a Deputy Chair of the highly influential and collaborative Home Buying & Selling Industry Group, established to enhance consumer confidence and certainty, increase transparency and reduce transaction timescales.

Matthew Cumber, Managing Director of Countrywide Surveying Services, commented: “Ana has demonstrated true passion and dedication to improving the home buying and selling process for consumers and industry in the UK. She has successfully led the development and delivery of the new best practice benchmarking standard in home surveys which is now widely adopted by corporate and SME residential surveying practices throughout the UK. And was instrumental in enabling a safe reopening of the housing market during Covid-19.

“Her vast experience, enthusiasm, drive and influence will prove to be a real asset across the business and I expect her to be instrumental in delivering sustainable growth in the right way.”

Ana Bajri, Senior Technical Manager for Risk and Compliance at Countrywide Surveying Services, added: “I am delighted to join Countrywide Surveying Services and to work alongside some fantastic colleagues who deliver consistently outstanding results. My main aim is to drive the highest possible standards for corporate clients and consumers in a sustainable and risk-controlled way, and I can’t wait to get started.”

MCI appoints Darlington Building Society to lender panel

Darlington Building Society is the latest lender to join the growing lender panel of MCI Mortgage Club.

The Society offers a wide range of mortgages from residential and buy-to-let through to complex including credit repair. There is no credit scoring as each application is underwritten on an individual basis.

Darlington is keen to help first-time buyers and its range includes Joint Borrower/Sole Proprietor and Help to Buy purchase and remortgages.

It can accept four applicants on a mortgage and use all four incomes at 4.5x loan-to-income. The Society also lends on shared ownership up to 95% loan-to-share on both new build houses and flats.

Foreign currency is accepted on a mortgage application as long as someone is living in the UK property full time and is not an ex-pat. Currently, 14 different foreign currencies will be considered.

There is no upper age limit on repayment mortgages and for interest-only the maximum age is 85. Sale and downsizing is acceptable on interest-only up to 65% LTV and £200k equity or £300k if it is within the M25.

Melanie Spencer, Head of MCI Mortgage Club, commented: “Darlington Building Society is a very welcome addition to our mortgage club. Its array of lending criteria and products means the Society can offer our members choice and adaptability to what can seem like difficult cases.”

Chris Blewitt, Head of Intermediary Distribution at Darlington Building Society, said: “The strapline we use at Darlington is, ‘We make complex cases simple’ and we do that through our common sense underwriting and flexible lending criteria which underpins our personalised approach to lending.”

Brokers treading gently with ‘soft footprints’ most searched in April

New research from criteria search specialist, Knowledge Bank, shows that brokers are searching for applications that will not leave a lasting mark on a clients’ credit score. This follows the announcement in April that NatWest would no longer produce a hard footprint for agreements in principle (AIP).

Knowledge Bank holds the largest database of up-to-date mortgage lending criteria in the UK and its monthly criteria index shows the terms that brokers are actually searching for. These may well be reflected in mortgage completions in two-or three-months’ time.

In the residential market, ‘soft footprint at DIP stage’ was the most searched term by brokers, showing the growing importance of a good credit record. As purchases in the housing market become ever more competitive, house offers – or even viewings – are most likely to be accepted from those with an AIP or decision in principle (DIP).

This means brokers may well be applying to a number of different lenders at the same time to ensure their client has the decision they need quickly, without it tarnishing their credit record. It also could be due to brokers working with clients with low credit scores, concerned that a rejection would impact future applications.

April was the first month in 2021 that ‘furloughed workers’ was not the most searched criteria in the residential arena. Criteria changes in this area have stabilised from almost daily changes at the start of the scheme, to almost none in the past month. Although still in the top five, this suggests that brokers are either working with fewer clients on furlough, or that they now have a better understanding of the lenders that will lend to furloughed workers.

The buy-to-let market continues to garner interest from new landlords, with ‘first time landlord’ and ‘first time buyer’ both featuring in the top five most searched criteria. The UK rental market remains strong, with rents increasing across the country, with the notable exception of London, according to Rightmove. ‘Lending to limited companies’ is also a constant in the most searched terms, featuring every month since the criteria index began in July 2018, with the tax benefits a clear attraction for landlords.

A new term featured in the five most searched terms in the equity release market; ‘medically enhanced lifetime mortgage’. It is the first time since April 2019 the term has reached the top five. These products are for those with medical conditions which give them shortened life expectancies. In these scenarios, lenders look to give lower rates or higher loan to value (LTV) on the equity release products.

In the bridging arena, ‘maximum loan to value’ and ‘regulated bridging’ were the top two searched terms, with the latter increasingly used as a result of buyers using bridging finance when a property chain has broken down, or to purchase a property at auction.

Commenting on the latest results, Matthew Corker, operations director at Knowledge Bank, said: “The soft footprint searches show brokers are treading carefully when making applications for clients. This might be as a result of the economic divide, with some clients struggling financially and wanting to avoid damaging their credit scores further. It may also be due to the increase in buyers rushing to buy a property, and looking to secure a mortgage in principle quickly so they can make firm offers.

“The two-speed rental market is gathering momentum with continued interest from new landlords and even those new to the property market completely. Those looking to invest will probably be looking outside of the capital as rents outside of London continue to increase rapidly.

“With criteria changes continuing at a rapid pace, brokers could spend hours every day searching for the latest criteria, so using a comprehensive criteria search system can save them a massive amount of time and ensure they are providing best advice.”

Half of Gen Z Have Been Targeted in a Digital Fraud Attempt

TransUnion’s Consumer Pulse Study has found that a third (33%) of UK consumers say they have been targeted in a digital fraud attempt related to COVID-19 in the last three months, though just 4% fell victim to the scams. This represents a steady increase from when the pandemic began, with just under a quarter (24%) saying the same in April 2020, with 6% falling victim.

Gen Z adults, born 1995 to 2002, are the most targeted by fraudsters out of any in the UK, at 51%. They also appear to be more likely than other generations to have fallen victim, with 19% of the identified scams being successful. They are followed by Millennials, with 37% having been targeted in a digital fraud attempt and 16% of those becoming victims.

Among consumers in the UK targeted with digital fraud related to COVID-19, the most common scam is phishing, accounting for just under half (48%) of fraud attempts.

“The COVID-19 pandemic has been yet another example of fraudsters looking to take advantage of a significant world event and use it to scam UK consumers. The almost overnight transition online brought about by stay-at-home orders catapulted the country’s digital acceleration like we’ve never seen before,” said John Cannon, managing director, fraud and ID at TransUnion in the UK. “As we see digital fraud impacting a substantial portion of the population, it’s important to keep in mind the significant progress made in protecting businesses and consumers from attempts like this. In fact, UK Finance notes that while fraud volumes have increased in the last year, overall financial losses saw a decrease of 5% compared to 2019.”

Gaming industry fraud

The online gaming industry is a prime example of an industry facing rising numbers of transactions as in-person options for participation were closed off and overall participation from consumers rose through the year. Unfortunately, this was accompanied by rising fraud rates. Through its TruValidate solution, TransUnion documented 19% growth in transactions among its global iGaming customers from 2019 to 2020, likely due to an increase in activity on customer platforms, and recently researched its fraud impact in a special report. Globally, it determined that its online gambling customers experienced a 9% increase in the rate of suspected fraud among the 576 million iGaming transactions TransUnion analysed for risk indicators last year.

This growth aligns with industry figures which registered a significant increase in UK consumers gambling online last year. In the year to December 2020, nearly a quarter (24%) of UK adults had gambled online in the previous four weeks, up from 21% in 2019.

Adam Hancox, head of gaming for TransUnion in the UK and Europe said: “As more people turn to online platforms for gaming, either as a natural evolution of their engagement with the industry or as a result of COVID-19 limiting the chances for betting in person, it’s absolutely crucial that providers are operating a protective, secure environment. Recognising an increase in fraud attempts in gaming, as well as the high rate of consumers reporting digital fraud attempts, operators need to ensure they are keeping pace with the latest technology and fraud prevention solutions.”

As iGaming on mobile devices is still much higher than desktops, with the percentage of online gambling transactions coming from mobile devices at 69%, this will be a priority area of focus for gaming operators in the coming months.

Startup bank Pennyworth begins beta testing of augmented intelligence app

Pennyworth, the digital bank founded by former-Barclays executives for busy professionals, managers and business owners, has made the first version of its financial planning app available on iOS devices for testing by members of its Pennyworth Pioneer community. An Android version of the app will be made available in early May.

Pennyworth’s app was created to help aspiring-affluent individuals earning more than £40,000 a year, or with a similar level of savings, make the most of their money by making it easier to identify, prioritise and fulfil important life goals.

The Pennyworth app’s initial version features augmented intelligence technology to support advanced goal-setting, create tailored financial plans, and provide smart suggestions to help customers achieve their goals.

This testing phase will hone Pennyworth’s planning capability and help determine users’ requirements for a range of new financial functionality made possible by open banking.

Jeremy Takle, founder and CEO of Pennyworth, comments: “The Pennyworth app is a giant leap forward for made-to-measure banking. We are putting a bank manager in the pockets of busy people and making it easier for them to get the most out of their finances. Helping people fulfil their goals is crucial for truly personalised banking and allows us to build new and unique services that help achieve those goals faster.”

Ben Harvey, founder and Chief Product Officer of Pennyworth, comments: “We’ve done lots of research with our Pioneers to discover how to help them best and are delighted to share the results of our initial development work for their feedback. Pennyworth’s app delivers advanced goal-setting, clear guidance and a personal-finance algorithm to help customers achieve the important things in their lives. No-one else comes close to delivering this kind of tailored support for aspiring-affluent banking customers.”

First 4 Bridging announces launch of semi-exclusive BTL with Castle Trust Bank

First 4 Bridging (F4B) has announced the launch of a semi-exclusive buy-to-let (BTL) product with Castle Trust Bank.

The BTL product has a five-year term with a two-year ERC at a rate of 4.5%. It has a maximum LTV of 75% and an arrangement fee of 2%. It is available to first-time landlords and portfolio landlords for residential and remortgage purposes, has a minimum loan size of £150,000 and a maximum loan size of £2m.

It is available to individuals, sole traders, limited companies, LLPs and partnerships, covering a range of BTL investment vehicles including holiday lets, HMOs, portfolio loans and property refurbishment. The product is offered via a select group of distribution partners.

F4B’s presence across the UK has grown in recent years and the packager has established close working relationships with intermediaries, introducers, service providers and private lenders around the country to bolster its already extensive range of specialist lending solutions.

Donna Wells, Director at F4B, commented: “We are experiencing a huge uplift in activity levels across all areas of the BTL sector as a range of investors continue to take advantage of some favourable market conditions, highly competitive rates and strong service levels, especially from specialist lenders.

“Many landlords are looking for lenders with flexibility on how interest is serviced and who have the appetite to make lending decisions based on some unconventional circumstances. As such, Castle Trust has become a great option for many and we fully expect this to be a popular product amongst new and existing intermediary partners when servicing the needs of their landlord clients.”

Rob Oliver, Sales Director at Castle Trust Bank, added: “This semi-exclusive product offers a low five-year fixed rate with a two-year ERC, up to a maximum of 75% LTV. It means that the ICR calculation can be based on the product rate, but also gives landlords the opportunity to refinance or sell after 2 years without penalty and this flexibility is crucial in the current uncertain environment.

“When we chose the distributors to offer this semi-exclusive product we wanted to partner with firms that match our own commitment to excellent service, and the team at First 4 Bridging fit the bill. We’re looking forward to working together with them to help more property investors unlock even more opportunities.”

Business barometer: Three in four small businesses set out growth agenda for the post lockdown era

More than three in four small business owners (78%) are working on plans to strengthen their enterprises in the next 12-months, with the top priorities being to increase sales income (48%), to launch new service lines (28%), reduce the fixed costs (23%) and to build up financial reserves (23%).

These new research findings from Hitachi Capital Business Finance come at a time when the country prepares for the ending of COVID restrictions and the small business sector gears up for a period of recovery. Hitachi Capital’s Business Barometer research also found that the percentage of small business owners predicting growth has soared from 26% to 36% since January, with growth forecasts recovering in troubled sectors such as retail, hospitality and construction.

With small business confidence at a two-year high, Hitachi Capital asked a nationally representative sample of 1,306 small business owners which initiatives they were prioritising in the next 12-months to make their business stronger.

Beyond boosting income, launching new services and managing costs, the other notable priorities for small business owners for the year ahead were to: spend money on online marketing to support brand awareness and sales (18%), plan ahead with business budgeting (16%), invest in staff development (16%) and improve the digital capabilities of the business (15%). Set against a focus on expansion and sales, the research also suggested that contingency planning has taken a backseat for the foreseeable future. The proportion of businesses looking to make contingency plans has fallen from 21% to 13% over a six-month period.

Sectors driving growth plans

The industry sectors where business owners were most likely to be prioritising growth initiatives were also those sectors that had struggled the most during a year of lockdown.

  • Small businesses in the manufacturing sector were most likely to be prioritising the increase of income and new business in the next year (68%, compared to a national average of 48%).
  • The launch of new service lines and a push to diversify the business was most prevalent among enterprises in the retail sector (45%, compared to a national average of 28%).
  • In the hospitality sector, small business owners were those most focused on building up financial reserves (30%), whilst reducing fixed costs was a top priority of small business in manufacturing, construction and retail (27% for each)

Need for finance to support growth plans

More than half of small business owners (53%) said they would need more finance to see their expansion plans come to fruition over the next 12-months. Finance was most likely to be needed to help business owners hire new people (27%), launch new services and products (25%) and to help them to compete with larger competitors (23%).

Interestingly, more companies this quarter will need an injection of funds to either move to a better location or a bigger office space (19%), whilst others need finance to invest in new production lines and machinery (18%).

Joanna Morris, Head of Insight at Hitachi Capital Business Finance comments: “As we all re-emerge from a succession of lockdowns, small businesses are eager to expand over the coming months, having had such an uncertain time of it throughout 2020. Small businesses are the bedrock of the UK economy, so it is encouraging to see that they are still standing tall and looking forward optimistically at a time when many larger organisations are evaluating the impact of COVID-19.

“As a provider of alternative finance, it is reassuring to see so many small business owners positivity planning for the future and expansion plans being made. However, making plans is one thing, affording them is another and for many enterprises there is a clear need for finance. We’ve been working closely with the small business community throughout the pandemic and as business owners get back on track, we want to reassure them that we are by their side when help is needed most.”