Shares in Distribution Finance Capital (LSE:DFCH) climbed as much as 10% in early trading on Thursday after the specialist bank posted a sharp rise in first-half profits and said full-year earnings would materially exceed market expectations.
The group, which provides working capital to UK dealers and manufacturers, reported pre-tax profit of £9 million for the six months to June, up 20% on the same period last year.
Lending volumes hit a record £828 million, supported by £1.4 billion of facilities and a dealer base that grew to 1,491 from 1,250 a year earlier. Its loan book expanded 21% to £728 million, while the net interest margin remained strong at 7.9%.
Customer deposits increased to £688 million across 15,500 accounts, and arrears stayed low, with cost of risk at 0.63%. The bank also improved its cost-to-income ratio to 57%, despite investment in asset finance.
Looking ahead, DF Capital said new lending capacity of around £950 million gives a clear runway for growth, with no need for extra equity funding to reach a £1.3 billion loan book.
Chief executive Carl D’Ammassa said the results showed “significant progress” and confirmed the bank’s medium-term growth targets.
After an early flourish, the stock settled back to 53.04p, up 3.04p.