S&U PLC (LSE:SUS) had its target price trimmed by Peel Hunt after the specialist lender spelled out the current impact of the FCA’s Financial Difficulty review.
S&U's motor finance arm Advantage has increased its levels of forbearance [repossessions], which has led to a reduction in the collections ratio (of amounts falling due) from 92.1% in 2023 to 87.1%, triggering impairment charges.
Affordability issues, also falling under the FCA review, have led to a slowdown in lending volumes and lower forecast receivables.
Due to the current situation, Peel Hunt has reduced its earnings-per-share estimates by 20% for the year to January 2025 and by 7% for each of the following two years.
Peel Hunt’s new target price is 2,280p, down 5%, though it believes the issues are temporary and should ease once the FCA review is concluded.
A 'hold' is its view.
Shares eased 2.8% to 1,890p.