S & U PLC (LSE:SUS) said it expects to propose a second interim dividend as both its businesses “meet expectations and exceed budget” for year end on 31 January 2023.
Trading in both motor finance lender Advantage and property bridging lender Aspen “remains excellent”, it said in a statement ahead of final results in late March.
The board proposed a second interim dividend of 38p per share, up from 36p a year ago.
Chairman Anthony Coombs said: "Whilst the uncertainties of forecasting and fly casting have much in common, 2023 is likely to see constrained levels of consumer confidence and spending in the UK. Nevertheless, historically this has and, I believe, will continue to present good, responsible, lending opportunities for S&U. We will take advantage of these with the same agility, prudence and imagination which has served S&U so well for so long."
The FTSE-listed company hailed the continuation of “very good” trading at its businesses through its 31 January year end amid an economic background where UK consumer and business confidence is near historic lows.
It made “prudent adjustments” to underwriting and the scorecard, and increased some rates to protect net interest margins as both operational and financial costs grew.
Group net receivables reached roughly £420mln from £370mln at the half year stage, while collections were said to be “good” in both businesses.
Advantage’s transaction levels rose 21% to almost 24,000 for the year, with the usual sales lull in December skipped, while tightened credit criteria led to the average loan size increasing 9% to £7,800 per deal.
Collections were 94% against due, while bad debts and voluntary terminations were below budget, and monthly live collections exceeded £14mln for the first time last month.
Aspen’s progress was said to be “at a slower pace commensurate with recent trends in the UK housing market”, with house prices down for the past five months.
Its net receivables still rose from £108mln to £114mln during the year, while in repayments there was just one of 141 loans in repossession and four customers more than 60 days overdue.
Borrowings rose from £180mln to £192mln and though this expansion is “likely to abate”, a further extension to the group’s current £210mln committed facilities is expected in the first half of the new financial year to support growth.