PCF Group plc (“PCF”, the “Company” or the “Group”) has issued an update for the year ended 30 September 2018 and is pleased to report that trading is in line with market expectations.
The company reports that new business originations are 75pct ahead of last year at £148 million (2017: £85 million) and that the quality of originations has met management targets with 70pct of originations being in our prime credit grades. The lending portfolio has grown to approximately £219 million compared to £146 million at 30 September 2017, an increase of 50pct. The Group’s portfolio has continued to increase rapidly and is on target to grow the lending portfolio, through organic growth in existing products, to £350 million by September 2020.
The months of August and September 2018 were consecutive record new business origination months for the Group. The company describes its increased lending to the prime sector as a strategic decision enabled by reduced cost of funds, aligned to the company’s risk appetite and cautious outlook for the UK economy.
The prime lending markets for consumer motor finance and business asset finance are competitive arenas, so PCF is confident there are inbuilt advantages to competing in the larger prime markets that will improve future profitability. Firstly, lending to prime borrowers leads to lower levels of loan delinquency later and secondly, increased scale of the Group’s own lending book in proportion to its fixed costs improves its operational gearing. Key in the company’s drive for increased profitability is its continued investment in technology to promote efficiencies and meet the customers’ needs.
Following its success in achieving the Savings Champion Award for 2018 Best New Provider, PCF has built its retail deposit base to £190 million (2017: £53 million). PCF is also a participant in the Bank of England’s Term Funding Scheme which has further diversified the company’s funding base and helped to reduce funding costs.
On 8 October 2018, PCF announced the acquisition of Azule Limited, a UK market leader in the provision of specialist funding and leasing services to the broadcast and media industry. The acquisition is a diversification of the Group’s asset classes and offers a new route to market with an origination capability of over £50 million per annum. The acquisition is subject to FCA approval for change of control.
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