Buoyant new car market continues to drive growth for credit provider

A BUOYANT new car sector is continuing to pay dividends for Solihull-based motor finance provider S&U.

In a trading update for the period from August 1 to December 7, the company said Advantage Finance, its Grimsby-based specialist car finance provider, had continued to grow to record levels of profitability and customer volume.

It said applications were now at near record levels, with live customer numbers up 34% on last year and approaching 42,000.  Net receivables at Advantage are now over £189m, and transaction numbers show a 16% increase on the comparative period last year.

Monthly collections are at record levels and now exceed £8m per month. Although the rolling 12 months impairment to revenue ratio has increased from 17.7% to 18.5% during the period, it said this was still in line both with the same ratio measured over the last five years of 19.1%, and was within expectations.

It said crucially for long term sustainable growth, Advantage continued to develop its industry-leading underwriting systems, aided by customer service systems with its broker partners.   

Having obtained a further £15m of bank facilities during the period, the group now has facilities of £85m, sufficient for the growth anticipated at Advantage Finance over the next year, and for the launch in January of Aspen Finance, its new pilot bridging finance business.

So far as Aspen is concerned, it said the current dearth of supply in the housing market and long term unmet residential demand, provided secure and profitable opportunities for property backed bridging lending.

“We continue to believe that this presents a very good opportunity for S&U to diversify its revenue streams and preparations for the launch of Aspen Bridging Finance are now well advanced,” it added.
 
Commenting on the group’s performance and outlook, Anthony Coombs, S&U chairman, said: “Despite widespread assumptions of post Brexit gloom, consumer appetite for credit, partially reflecting a robust labour market, continues unabated.

“This apparent contradiction has been recently reflected, for both S&U and for others in the speciality finance sector, in what I view as an unjustified decoupling of S&U’s performance and prospects and our stock market valuation.”