Demand for the service and products provided by motor finance and bridging loans specialist S & U Plc (LON:SUS) remains strong.
The company said in its interim results statement covering the six months to the end of July that the used car finance and lower value property sectors the company serves are proving “very resilient in a more challenging economic and consumer climate”.
READ: S & U continues to deliver record profits despite slowdown in new car sales
Signalling its confidence in the future, the company bumped up its first interim dividend by 14% to 32p from 28p in the same period of last year. First-half 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.
The Advantage Finance car loans arm notched up a record profit of £16.3mln (2017: £14.4mln) and net receivables rose to a record £263.5mln from £226.8mln the previous year; customer numbers stood at a record 58,000.
In the first half of the current fiscal year, 25% of loan applications were accepted, down from 31% a year ago, while the overall transaction rate as a percentage of applications received eased to 2.3% from 2.8% the year before, as Advantage sought to maintain the quality of its loan book.
Further evidence of a slight tightening in the market came in the form of a slightly higher-than-expected rolling 12 months impairment-to-revenue rate, which rose to 24.7% from 21.9% at the end of January 2018. The risk-adjusted rolling 12-month yield as a percentage of average monthly receivables reduced to 25.4% from 26.7% at the end of January.
Current evidence on early repayment from customers acquired this half year with tightened underwriting points to a gradual return to the lower impairment of recent years, S & U said.
READ: S & U says bridging finance arm is now profitable
As previously announced, Aspen Bridging, the property finance business, is now profitable. Aspen recorded a profit before tax of £279,000 versus a start-up loss of £280,000 the year before.
"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 Anthony Coombs, the chairman of S & U.