In a trading update for the year ended 30 September 2018, the AIM-listed company said its lending portfolio grew to about £219mln from £146mln last year, putting it on track to meet its target of £350mln by September 2020.
New business originations jumped 75% to £148mln for the year, up from £85mln in 2017, with 70% of these with customers who have prime credit grades.
PCF said the growth in new business originations reflected the “benefits of a banking model and our reputation for excellent customer service”. Reduced cost of funds allowed PCF to increase lending the prime sector, which was a strategic decision aligned with the group’s cautious outlook for the UK economy.
The group said while the market for prime lending in consumer motor finance and business asset finance is competitive, this tactic will improve future profitability. Lending to prime borrowers reduces the risk of customers failing to repay their loan on time. It also improves operational gearing by increasing the scale of the lending book in proportion to fixed costs.
PCF, which launched a new internet banking platform earlier this year, said it would continue to invest in improving its technology to attract high-quality customers.
The retail deposit base has ballooned to £190mln from £53mln since receiving the Savings Champion Award for 2018 Best New Provider.
Earlier this month, PCF announced that it would buy Azule Limited, which specialises in funding and leasing services to the broadcast and media industry. PCF said the acquisition would diversify its assets classes and allow it to tap into a market that has new business origination potential of more than £50mln per year.
"A diversified banking model is proving a great strength and our first full year as a bank has been extremely encouraging,” said chief executive Scott Maybury.
“We have made excellent progress against ambitious targets and our focus on organic growth through existing lending markets has now been supplemented with an earnings enhancing acquisition.”
Shares rose 5.6% to 37.50p in morning trading.