S&U looks for post-election pick-up

MOTOR finance and home credit provider, S&U, has said trading remains satisfactory, buoyed by the strong UK car market.

The Solihull firm said in an interim management statement that Advantage Finance, its motor finance business, was continuing to see record debt quality and it anticipated meeting targets for the year.

The statement, covering the period between February 2 and May 20, 2015, said things were slightly more subdued on the home credit side of the business.

Here it said trading reflected “a more cautious climate prior to the General Election and full Financial Conduct Authority (“FCA”) authorisation”. Nevertheless, weekly collections were said to be strong on conservative underwriting standards.

Cash generation remains good in both businesses and overall group profitability is comfortably ahead of last year.

The increased cash generation from the home credit business has partly off-set a lower year on year investment in the maturing motor finance business.  Therefore, the firm said there was clear headroom for the continued expansion of car finance arm, a move needed if the expected increase in summer and autumn trading materialised.

It said this strong treasury position had been buttressed during the period by confirmation of further medium term facilities from HSBC. However, it said that in order to achieve its objective of diversifying long-term funding, it was holding talks with both the Prudential Regulatory Authority and Financial Conduct Authority with a view to obtaining a Deposit Taking Licence.  

The Home Credit business has been preparing its application for full FCA authorisation and it said anticipated that the FCA would adopt a proportionate and co-operative regulatory approach. Preparations are also being made for authorisation which the firm said would further improve the quality of its customer service and the operational efficiency.

Advantage Finance is expected to follow suit early next year and the company said it was looking forward to continuing its dialogue with the regulator.
 
Commenting, Anthony Coombs, S&U chairman, said: “Although forthcoming regulatory changes and a pause in consumer appetite pending the General Election have made sales less buoyant than the recent past, group collections, debt quality and our treasury position remain very strong.  We look forward to yet another successful year.”
 

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