profits
The consumer and business finance divisions of lender Private
& Commercial Finance Group (P&CF) performed “in line with
expectations” in the six months to September 30 2008, despite the
concurrent upheaval in financial markets.
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Finance receivables grew by 5 per cent over the period to reach
£170m, “including finance charges to be recognised in future
periods of £30m,” P&CF said, while profit before tax is
expected to increase by 15 per cent compared with the corresponding
period in 2007.
CEO of P&CF, Tony Nelson said of the group’s consumer motor
finance activities: “P&CF predicted last year that there would
be a recession, so we are writing volumes of business that we are
happy with on terms we are happy with. Around 70 per cent of
applications are auto-declined, with the remainder looked at by our
underwriters. We constantly modify our terms, with a credit matrix
committee meeting regularly.”
He added that the group had seen trouble on the horizon and had
modified its plans accordingly. “Last year we prudently decided to
rein back our new business volumes because of the outlook for the
wider economy. This has greatly benefited the group because, with
demand for our services significantly exceeding supply, we have
been able progressively to tighten our lending criteria and further
increase margins.”
The group has “no appetite” to grow the lowest tier of its motor
finance book, which comprises less than 10 per cent of its total
loan portfolio, a proportion which has remained stable since “long
before the start of the credit crunch”. “We currently have a
blended portfolio on terms that suit us,” Nelson said.
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By GlobalDataMarket conditions for motor finance providers will improve “in
the long term”, Nelson predicted: “In the same way that the
mortgage market is moving back to more sensible lending, with lower
loans to value and lower multiples of earnings, I believe that the
motor finance market is moving somewhat closer towards the
situation that was in place under the old HP control orders where
borrowers had to put down a good deposit – say, 30 per cent – and
paid over three years, giving funders better collateral in the
vehicle and lower voluntary termination risks.”
