In a statement to be delivered at it annual general meeting (AGM) on Friday, PCF's chief executive officer Scott Maybury will tell shareholders that business origination in the five months to the end of February was up 30% year-on-year.
The quality of originations has been maintained with more than 79% of originations being in the lender’s prime credit grades, up from 76% in the corresponding period a year earlier.
The lending portfolio has grown by 55% to more than £395mln as at the end of February 2020 (2019: £255mln) and this is supported by retail deposits of £346mln (2019: £202mln).
The company’s consumer motor finance offering was launched in late January of this year after a trial period and volumes for February are very encouraging, with consumer motor lending up 80% year-on-year.
“This prime business attracts a lower net interest margin than our near prime originations but is expected to deliver both lower loan loss impairment charge and administrative expense. This is an exciting start for this product and proves our model to build portfolio scale and strong operational gearing in the medium-term,” Maybury’s AGM statement says.
Business finance volumes in the current financial year increased 5% from a year earlier while the bridging property finance portfolio as at 29 February 2020 was £21mln, having only commenced business this time last year.
"The world economy faces increased economic concerns over Covid-19 and there remains uncertainty over the UK's transition to an independent trading nation. It is therefore important we maintain our cautious risk appetite and remain proactive towards these challenges.
"We have confidence in the short-term as we build on our market share in diversified markets and can take comfort from the £75mln of unearned operating income, in respect of future years, already present on our balance sheet. In the medium-term our return on equity target of 15% remains in place,” Maybury added.
Sharpened prime lending focus
In a note to clients, analysts at ‘house’ broker Shore Capital commented: “With a cautiously confident outlook that acknowledges UK macroeconomic uncertainty, PCF has maintained a cautious risk appetite including a sharpened focus on prime lending, which should see credit quality continue to improve.
“Nevertheless, PCF remains one of the fastest-growing UK specialist lenders with loans +55% YoY to £395m at end-February. Compared to PCF’s medium-term RoE target of 15%, our 20% forecast in 2022F does not incorporate incremental equity capital, which we would expect the company will need to fulfil its growth ambitions.”
In a subsequent statement, PCF announced that all resolutions were duly passed at the company's AGM.
In afternoon trading, PCF shares were trading at 29.25p, down 2.5%.
-- Adds analyst comment, share price, AGM result --