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S & U says bridging finance arm is now profitable

Published: 03:32 03 Aug 2018 EDT

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More than 80,000 monthly finance applications are being received by Advantage Finance

The latest trading update for S & U Plc (LON:SUS) once again suggested that its car finance arm, Advantage Finance, has no reverse gear.

Since the company’s last update in mid-May Advantage has continued to trade well with profits again at record levels.

READ: S & U powers on despite slowing UK economy

The used car market served by Advantage Finance remains healthy but after a recent burst of expansion, the company has deemed it prudent to be more picky with customer applications, resulting in acceptance levels narrowing to 25% of applications, down from 31% in the January to July period of 2017.

“This selectivity is consistent with both Advantage's emphasis on customer affordability and with our long-term strategy of sustainable growth,” S & U said.

Customer numbers are up 18% year-on-year at 58,100 and net receivables are up 15% on last year at £263mln.

The finance company said bad debts continue to run at higher levels than last year but recent underwriting refinements have led to early indications of an improvement in both new customer quality and early repayment performance.

Overall monthly collections in the first half of 2018 were up 20% on the first half of 2017 and are now approaching £12mln per month.

Bridging finance arm Aspen Finance see good repayment performance

The company’s expansion into bridging finance with its Aspen Finance subsidiary continues to go well, with the loan book standing at £16mln, up from £11mln at the end of 2017.

"Advantage Finance maintains its remarkably reliable record of continued profitable growth over the past nineteen years in a variety of macroeconomic conditions. Improvement in product, customer service and in underwriting strengthens their ability to build on this in years to come,” said Anthony Coombs, the chairman of S & U.

“Aspen Bridging, our new bridging lender, has made a promising debut and is now profitable.

“Both businesses give me every confidence that S&U will continue to deliver consistent improvements in shareholder value," he added.

Shares in S & U were up 30p at 2,545p in early deals, helped by Peel Hunt upgrading the stock to ‘add’ from ‘hold’.

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on 09/29/2016