| CATEGORY: AIM BULLETIN SECTOR: FINANCIAL SERVICES |
Compass Finance sees consumer loans downturn |
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Mon 02 Oct 2006
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LONDON (SHARECAST) - Debt advisory group Compass Finance has seen mixed trading in the past 12 months with a strong showing from its advisor arm but a loss from its consumer loans division.
The Debt Advisor is performing well with the new IVA case run rate more than trebling from an average of 18 per month in the second quarter to 60 in August 2006.
Future contracted income also increased from £0.87m to £ 1.21m and management expects this upward trend in new cases to continue.
Consumer loans, though, have been hit by a significant downturn as a combination of higher interest rates and nervousness surrounding house price inflation has hit demand.
Compass adds that direct marketing channels have come under increasing pressure throughout the market as a whole with reduced response rates creating lower applicant numbers and a consequential substantial increase in the cost per lead.
As a consequence the Consumer Loans division will report a loss for the financial year ended September, the statement said.
A comprehensive review and restructuring of its Consumer Loans division is under way that will involve job losses and the cessation of certain marketing activities.
Compass has signed one affinity deal with a mortgage lender and says further affinity relationships will become the cornerstone of the group's customer acquisition strategy.
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