S&U PLC (LSE:SUS), the specialist motor and property finance group, says confidence in achieving double-digit growth and return on equity is underpinned by strong first-quarter trading that came in ahead of both budget and the prior year.
Chairman Anthony Coombs said the group's ambitions were "exemplified by the resources we plan to make available, and the abilities of our people in achieving them."
The bullish outlook comes as S&U's motor finance arm, Advantage Finance, continues what the company described as a powerful recovery, with transactions in the first quarter up 63% on the same period last year.
Advantage's net receivables have grown to £392 million from £348 million a year earlier, and management believes the division is on track to reach its targeted 20% net receivables growth rate this year, which would push its share of the UK used car finance market above its current 10%.
Credit quality has improved markedly alongside the volume growth, with repayment rates averaging 92.4% in the quarter against 89.1% a year ago, while bad debt write-offs have fallen by nearly 41%.
Average lending rates at Advantage rose by almost a fifth on the first quarter last year to 15.3%, driving improved net interest margins.
On the regulatory front, S&U noted that the Financial Conduct Authority's redress proposals for motor finance commission are now subject to judicial review, but said they were likely to have little or no bearing on Advantage's future profitability.
Aspen Bridging, the group's property finance arm, produced first-quarter profit before tax on budget and level with a year ago, despite what Coombs characterised as a becalmed UK residential market.
Capital receivables at Aspen have grown to £191 million from £162 million, with the company anticipating another record year from the division as applications pick up.
To support projected net receivables growth of 20% annually over the next three years, S&U said it was concluding a securitisation project that would deliver medium-term funding at lower rates, with terms agreed and the legal process about to commence.
Group borrowing at the quarter end stood at £252 million, comfortably within existing facilities of £330 million.