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S&U trading holds firm despite UK’s “political vacillation”

The lender says trading has continued in line with expectations despite what it says is slowing economic growth and a "downbeat prognosis" for UK consumer spending

S & U PLC - S&U trading holds firm despite UK’s “political vacillation”

S&U PLC’s (LON:SUS) trading has remained in line with expectations despite what the firm says is a slowing economy and “political vacillation” in the UK ahead of Thursday’s general election.

In a trading update for the period to 9 December from 1 August, the lender, which specialises in motor finance and property bridging, said trading at its Advantage motor finance business was “proving robust”, with new deal advances up 11% to £127mln since the start of its current financial year while Advantage also hit a record of 63.500 customers.

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The new business has resulted in a “gradual increase in book quality”, S&U said, with Advantage’s rolling 12-month risk adjusted yield now around 25.2% of average monthly receivables compared to  24.9% as of 31 July.

As a result, the company is expecting Advantage to continue delivering profitable growth despite a “somewhat downbeat prognosis for British consumer spending”.

Growth was also continuing in the company’s property bridging business, with the loan book of net receivables expanding to £28mln from £18mln a year ago, however, the firm cautioned that the business was “not immune from the prevailing uncertainty and low level of activity it produces in the residential property market”.

Anthony Coombs, S&U’s chairman, said that slowing economic growth and the current political situation had “inevitably been reflected in the motor and property markets” where the company is operating, however, he added that “whatever the outcome" of the current uncertainty the group would “continue to exhibit its customary resilience, stability and sensible ambition to the benefit of our shareholders".

Analysts at S&U’s house broker, Peel Hunt, reiterated their ‘add’ rating and 2,300p target price on the stock, saying that while there was “a degree of economic uncertainty” and the company was taking a cautious approach to growth, the expected profitability to continue to expand.

The shares were 1% lower at 2,080p in mid-morning trading on Tuesday.

--Adds broker comment and share price--

Quick facts: S & U PLC

Price: 2164.547 GBX

Market: LSE
Market Cap: £257.96 m

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