The motor finance and property bridging specialist said although the coronavirus pandemic would undoubtedly have an impact on the group’s full-year results, it remains profitable and continues to pay dividends.
In the Advantage Finance car loan business, sales have recovered from around 40% of normal to nearly 80%. Loan applications are at a record high but the lender is being especially choosy about who it lends to in the current uncertain environment so transaction levels are running at around 75% of last year’s levels.
The focus on higher-quality customers means that it is seeing a higher level of early repayments and in the medium term, this may see offer the kind of significant market opportunities in the “near-prime” lending field from which Advantage benefited in the wake of the credit crunch 12 or so years ago.
Collection levels this year are running at just over 75%, it added, although in most years they would be around 94%, with the shortfall entirely due to repayment holidays that have been mandated by the Financial Conduct Authority (FCA), The regulator recently suggested that more repayment holidays should be introduced.
In the Aspen property bridging loan business, there has been an uptake in new transactions, with July being above budget and an increase in loan redemptions.
As the current deals pipeline slowly improves, current net receivables are just below £19mln compared to £15.5mln in early June.
The group’s borrowings stand at £108mln, up from £98mln at the end of June, partly as a result of the recent dividend payment but also because of slightly stronger sales growth in the Advantage business.
“Although recent trading trends have been encouraging, the level of uncertainty surrounding the economy, the direction of COVID-19 and the effect that it has on customers' confidence make prudence paramount,” S & U’s chairman, Anthony Coombs said in the results statement.
"What we can say for certain, is that S&U continues to make profits and has the experience, the financial resources, skilled people and tried and tested business philosophy needed to weather any further economic storms – and the ambition to grow strongly again when it is sensible to do so," he added.