Non-Standard Finance profits rise as all three divisions perform well
Doorstep lender Non-Standard Finance - whose £1.3bn bid for larger rival Provident Financial has the backing of 50% of shareholders - said on Friday that full-year profit rose 12% amid strong growth in operating profit in all three of its divisions.
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In the year to 31 December 2018, normalised pre-tax profit increased 12% to £14.8m, with revenue up 39% to £166.5m and earnings per share 8% higher at 3.7p.
The total net loan book rose 29% during the year to £310.3m, with branch-based lending up 25%, guarantor loans up 61% and home credit up 2%.
The company, which hailed a "solid" start to the current year, recommended a final dividend of 2p per share, taking the dividend for the year to 2.60p, up 18% from 2017.
Chief executive officer John van Kuffeler said: "2018 saw the group continue to make good progress. It also marked the conclusion of a period of significant investment in the group and structural change, so that we are now delivering sustained earnings growth.
"The fundamental drivers of our business remain robust: we are delivering strong loan book growth whilst maintaining tight control over impairment and have high risk-adjusted margins in all three business divisions."
NSF also took the opportunity to reiterate its bid for Provident Financial, which it said will ill reposition and revitalise Provident's businesses and their respective product offerings within the non-standard finance sector, enhancing their prospects for profitable growth.
"Under the leadership of the NSF board and NSF's strong management team, the transaction also represents an opportunity to unlock substantial value from an enlarged customer base in a highly specialised sector," it said.
Peel Hunt said pre-tax profit was 3% behind its expectations of £15.3m, while EPS was below its estimate of 3.9p. The dividend of 2.6p, however, was ahead of its 2.4p forecast.
"Whilst we forecast strong earnings growth in FY19, the risks to forecasts are high given the group’s focus on economically-sensitive unsecured lending," the broker said. "Focus currently will be on the ongoing NSF -Provident bid. We maintain our 'reduce' recommendation."