Cattles defies ‘credit crunch’ with 28
per cent H1 profit growth

 

Cattles,
the UK financial service provider to the non-mainstream credit
market that also specialises in car finance, appears to have
benefited from the chaos of the ‘credit crunch’ – announcing a
pre-tax profit increase of 28 per cent to £60.1m for the six months
to June 2007 and the addition of thousands of new customers on its
books.

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The FTSE company’s direct repayment customers grew by 49,000 to
458,000 on account of customers seeking alternative funding sources
from credit dry banks, and group loans and receivables consequently
rose by 14.6 per cent to £2.4bn.

Earnings per share was also up 21 per cent to 11.99p for H1 2007
and its direct repayment arrears has been stable year-on-year from
7.4 per cent in H1 2006 to 7.3 per cent for H1 2007.

Furthermore, despite interest rate rises in the UK, Cattles
maintained its average cost of borrowings at a consistent
year-on-year 6.8 per cent for H1 2007.

Cattles’ consumer credit division, which offers general loans
and car finance through its Welcome Finance brand, generated the
greatest revenue of £420m (94.6 per cent) out of a group figure of
£444m for H1 2007. Both the consumer credit division and the
group’s overall revenue grew by 30 per cent from £322.7m and
£341.5m, respectively in H1 2006.

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The group is therefore well on target to beat revenue figures
for year-end 2006, which reached £717.2m.

Cattles’ key priority for 2007/08 is to maintain careful
management of credit quality, customers’ arrears and bad debts. It
was also lucky to find additional equity finding in March this
year, after a successful placing of 33m new ordinary shares, which
resulted in gross proceeds of £133m.

Cattles also aims to strengthen its capital base and appropriate
earnings retention to provide funding capacity to support
continuing growth, according to its interim results.

Sean
Mahon, CEO of Cattles said: “It is our accumulated knowledge of
customer behaviour in the non-standard consumer finance market that
enables us to identify profitable lending opportunities and
successfully screen loan applications. Management of risk and
operational control over underwriting and regulated activities
remain our primary focus.”