Profit warning issued by motor finance firm after ‘unsurprising’ economic pressures

S&U, the Solihull-based motor finance and specialist lender, has issued a profit warning as the macroeconomic climate “unsurprisingly, impacted the Group’s progress and profitability”.

“Poor consumer confidence, continuing high interest rates, cost of living pressures and regulation” have driven profits down for the group, which now is likely to report a profit before tax to finish between 10% and 15% below expectations of £38m.

It does however, “expect a solid rebound” and is investing £15m in its motor finance division Advantage and its property bridging business Aspen. 

FCA approval has now been received for the appointment of Karl Werner as the new CEO at Advantage whilst an industry wide investigation into customer forbearance and affordability has evolved. 

In response to this, Advantage says it has made “precautionary changes” to its collection and repossession processes, with a focus on customers in arrears or who have been identified as vulnerable. As regulation continues to evolve, the firm says it will need a “proportionate and constructive dialogue” with the regulator to move forward.

Anthony Coombs, S&U Chairman said: “Faced with an array of challenges ranging from weak consumer confidence, cost of living pressures, funding costs and regulatory activity, 2023 has not been a vintage year for either S&U or the specialist financial services sector. Given the underlying strength, resilience and expertise of our Group, I fully expect a resumption of S&U’s habitual and robust profit growth in the years to come.”