Belvoir Group PLC (LON:BLV) can significantly grow its financial services segment with the Nottingham Building Society partnership, according to a City broker.
Earlier on Wednesday, the estate agent announced plans to acquire the entire issued share capital of Nottingham Mortgage Services (NMS), a wholly-owned subsidiary of the Nottingham Building Society.
READ: Belvoir Group to acquire Nottingham Mortgage Services for £600,000
At the same time, The Nottingham is entering into a 10-year agreement with Mortgage Advice Bureau (MAB) to provide mortgage and protection advice, through Belvoir as an appointed representative of MAB, to its members via its branch network and over the phone.
According to house broker finnCap, it provides direct access to a substantial source of clients with savings and a high likelihood of needing a mortgage for the first time.
The Nottingham currently has 50,000 18-39-year-old Lifetime ISA savers, which is expected to double within a few years.
If these potential new clients convert over a three to five year period (which would likely be from 2024) this could represent a significant increase on the 12,000 mortgages Belvoir arranged in 2020, analysts said.
The financial services segment now accounts for 20% of group gross profits or net sales.
“In the short term, the key point for us is that Belvoir has a range of growth opportunities in a changing, large and fragmented market and has the model (franchise based) and proven management skill to continue to take advantage of them,” analysts commented.
finnCap nudged up the target price to 334p from 332p after upgrading revenue and earnings per share (EPS) for 2022 to £27mln from £25mln and 19.8p from 19.5p respectively.
Shares rose 1% to 248.5p on Wednesday morning.