S&U PLC (LSE:SUS) said the trends seen up to June have continued with weak regulatory issues affecting motor finance arm Advantage, but good progress at property bridging finance group Aspen.
The specialist lender expects Advantage’s discussions with the UK finance regulator (FCA) to be concluded soon with a plan to move the business forward again.
"These negotiations will determine a contrast between a significant impact on Advantage's profitability in the first half (primarily resulting from restrictions on its collections capabilities), and an anticipated recovery in results brought about by a plan already in place for the second half of the financial year," said the statement.
Advantage’s value of advances year-to-date is 10% lower than the same period last year, with net receivables overall reducing slightly in the last 2 months to around £327 million (2023: £313m).
Customer numbers also fell slightly to 66,000, around 2% above 31st July 2023.
Restrictions on managing customer arrears and on repossessions have seen a year-to-date level of 87% repayments to due, from 94% last year.
Up-to-date live receivables have fallen to 69% of the total, from 79% last year, although a release from current restrictions should see a bounce back in the second half of this year.
Aspen Bridging saw record profits achieved in June (more than double last year) followed by good results in July, said S&U.
Second half interest payable and results should be further helped by the recent fall in base rates.
Aspen's loan book now stands at around £149m (31st July 2023: £104m) an increase of £8m in the period and £19m in the year with further steady growth expected in the second half of the year.
“Credit quality remains excellent with the value and number of late payers at less than 8% of the total book, whilst repayments and recoveries in the year to date are around 20% up on budget at £72m.”
Group borrowings stand at around £240m (2023: £183.7m) against £224m at year-end.
Anthony Coombs, chairman, said: "Although current trends at our Advantage, our motor finance business are undoubtedly challenging, we thrive on challenges and work for a significant rebound in the second half.
"By contrast, Aspen continues to trade sensibly and at record levels.
“We remain confident and determined for the year ahead."