Motor credit firm buoyant despite new car declines
Solihull-based motor finance provider, S&U has delivered an upbeat trading statement which flies in the face of the recent declines in UK new car market.
In a trading update for the period from August 1 to December 6, 2017, it said its specialist motor finance arm, Advantage Finance was making excellent progress.
“Despite recent downgraded forecasts for the UK economy, Advantage applications for finance have been very good. This has enabled Advantage both to maintain this year’s rate of transactions growth and to revise, refine and further strengthen its under-writing model,” it said.
As a result, live customer numbers have grown to 53,000 from 49,000 at the half year, meaning net customer receivables now stand at more than £240m for the first time, compared to nearly £227m in July.
It said monthly collections and overall credit quality remained good, while rolling 12 months impairment to revenue increased slightly to 23.4%, although this continued to be primarily due to overall portfolio product mix.
It added that while underwriting refinements had seen a slight reduction in loan approvals, appropriate in a more uncertain economic climate, the introduction of a new e-signature system had been well received by both customers and brokers and had led to an improvement in the approval-transaction rate.
S&U’s property arm, Aspen Finance, which specilaises in bridging finance, was also said to be progressing well.
“Our pilot bridging operation, Aspen Finance, has made significant progress and increased its loan book to £9m from £2m in July. Margins and LTV are within budget and very early repayment experience is good,” it said.
It said that for the company as a whole, the addition of £20m in funding during the period, meant the group now had total available committed facilities of £115m, sufficient to accommodate current growth at both Advantage and Aspen. Further facilities will be arranged as required.
Commenting on the performance and outlook, Anthony Coombs, S&U chairman, said: “Whatever the current political uncertainty, particularly over Brexit, and despite a forecast slowing economy, demand for S&U’s products remains very robust.
“Our selective lending and continuous refinement of our underwriting underpin our debt quality and produce steady sustainable growth.
“I am pleased to see this seemingly becoming more widely recognised within the investing community; we will continue our high standards of responsible lending and the excellent performance which results from this.”
