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PCF Group hikes dividend after delivering record profits in first full year as a bank

We look forward to the year ahead with confidence in the bank's ability to deliver profitable and sustainable growth for our shareholders,” chairman Tim Franklin said

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PCF became a fully operational bank in July 2017

PCF Group Plc (LON:PCF) hiked its final dividend by 58% after delivering record profits and meeting its key strategic objectives in its first full year as a bank.

The specialist lender, which became a fully operational bank in July 2017, said pre-tax profit jumped 44% to £5.2mln in the year to 30 September 2018 from £3.6mln a year ago after receiving a banking licence led to cheaper cost of funds.

WATCH: PCF Group sets new records with increasing profitability and 'delivering on key objectives'

New business originations gained 75% to £148.4mln from £85.6mln last year, in line with PCF’s target. Customers with prime credit grades accounted for 70% of new business originations.

Retail deposits more than trebled to £191mln from £53mln last year as the number of customers rose to 4,500 from 1,060.

The total lending portfolio increased by 50% to £219mln from £146mln with strong growth in the business finance and consumer finance divisions.

PCF, which specialises in motor finance and loans for business assets, said it is on track to reach its 2020 portfolio target of £350mln a year earlier than planned following a solid full-yearperformance and boosted by the acquisition of media and broadcast finance company Azule Limited at the end of October.

READ: PCF to buy UK specialist finance provider Azule for up to £5.6mln

The bank expects Azule to immediately enhance its earnings and the integration of the business will be a priority for 2019.

PCF ended 2019 with net assets of £42.6mln, up 10.1% on £38.7mln last year. The group’s common equity tier 1 capital ratio was 19.3%, comfortably ahead of minimum requirements.

The net interest margin – the difference between interest received on loans and amount paid on savings deposits – edged down to 8.2% from 8.2% amid tough competition in the prime lending sector.

The after-tax return on equity increased to 10.3% from 8.7% last year, putting the group on track to reach its medium-term target of 12.5%.

The final dividend was raised to 0.30p from 0.19p as it issued a positive outlook.

"We look forward to the year ahead with confidence in the bank's ability to deliver profitable and sustainable growth for our shareholders,” chairman Tim Franklin said.  

Quick facts: PCF Group Plc

Price: 36.495 GBX

AIM:PCF
Market: AIM
Market Cap: £91.31 m
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