A sensible captain steers his ship according to the weather conditions and that’s what S & U Plc chairman Anthony Coombs says he is doing to achieve sustainable growth.
The lender, which specialises in motor finance and property bridging, has continued to deliver record profits and attract new customers despite a widely-reported slowdown in the new car market.
Coombs said while the dip in UK consumer confidence has affected the new car market, it has not hit the new car finance market yet.
The new car market is still growing by 12% per year while the Advantage Finance motor division continues to receive some 85,000 applications for loans a month.
But Coombs is not complacent. He knows the company is not immune to the potential impact Brexit could have on the economy.
“What we’ve got to be careful about is we are at the late stage of the economic cycle; people haven’t been saving, there’s been a little bit of political uncertainty – to put it mildly - in terms of Brexit and that may be affecting consumer confidence,” he said.
In response to the political uncertainty, the group has made some changes to its underwriting. It is being more picky with customer applications, resulting in acceptance levels narrowing to 25% from about 30% previously.
Coombs said this may be prudent but he thinks it is the best way to maintain steady sustainable growth.
Even so, customer numbers now standing at a record 58,000.
“It’s very encouraging. I still think that our potential for growth is enormous and I think we’ll hit our numbers that the market has out there,” Coombs said.
Bridging finance arm now profitable
The Advantage Finance division is the company’s bread and butter but away from that the group’s bridging lending pilot, Aspen Bridging, is also showing progress.
Aspen is now profitable and the loan book exceeds £16mln.
“I think that it’s got a lot of long-term potential, we’re putting more people in there in order to accommodate the rate of expansion that we hope to see there,” Coombs said.
“We will sign off on the pilot one way or another later this year as we’ve said but we think there’s promise.”
Record full year followed by a strong first-half
In the year to 31 January 2018, pre-tax profit jumped 20% to £30.2mln and revenues gained 32% to £79.9mln.
In the six months to the end of July, revenue rose to a record £44.5mln from £37.6mln in the first half of last year. Profit before tax rose 17% to £16.7mln from £14.3mln the previous year.
"Demand for our products and services remains strong despite a more challenging consumer and economic climate. We are therefore confident of maintaining S & U's record of strong, stable and consistent growth in years to come," said Coombs.