S&U PLC (LSE:SUS), the specialist lender, said business between April and June has followed the trends seen earlier in the year.
Motor finance has been affected by the several regulatory investigations underway across the sector while property bridging is showing ‘substantial progress’ as the housing market recovers.
At Advantage, its motor finance arm, S&U said it is taking a cautious approach to repayments as talks with the finance regulator FCA and its Skilled Person continue about the new Consumer Duty regime and review of Borrowers in Financial Difficulty.
This has had a significant impact on repayments and profitability, S&U added, though these discussions should conclude during the second half of the year.
Discussions mainly revolve around affordability and forbearance, said the statement.
Advantage's live monthly collections have reduced from 92.1% of due in the year ended 31st January 2024 to 87.7% of due in the first quarter of this financial year with repossession receipts similarly affected.
That said, demand for Advantage's products remains strong, S&U said, with application numbers in the first quarter a record.
Both income and transaction numbers were above last year, despite tightening loan-to-value and affordability criteria and loan rates have risen recently.
Aspen Bridging meanwhile operates in the unregulated part of the property finance market and is seeing “sustainable and profitable growth”, a statement ahead of its AGM said.
Advances in the second quarter were £44.4m, more than double the £21.3m last year.
“Robust credit quality is reflected in overall repayments of £38.5m in the first quarter, more than 55% up on last year,
“The yield on new deals has increased slightly and is ahead of budget, with net receivables reaching £141.3m (2023: £113.6m).
“Profit before tax rose to a record £1.45m in the first quarter, 36% better than 2023, and ROCE reached 11% for the first time.
“More promising still are signs in the UK residential market of an increase in sales instructions and prices. “
For the second quarter to June overall, group net receivables grew slightly to £478m, but profits fell to £6.9 million (2023: £10.5 million) on net assets of £235 million (2023: £228 million).
Increased impairment provisioning arising from the lower repayments at Advantage accounted for £3.6m of this reduction.
Current Group borrowings stand at £237m against S&U's £280m of facilities.
Anthony Coombs, S&U chairman, said: "Although fully cognisant of the challenges currently being negotiated at Advantage, an improving economic outlook both for consumers and businesses, a strong labour market and greater political stability will all benefit S&U over the coming year.
"We wrestle on with confidence."