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The cost of living crisis is proving a boon for this stock

This financial services group has brought in bumper profits from high-margin lending activities, a trend set to continue
March 7, 2023
  • 2022 pre-tax profit rises 90 per cent to £19mn on 42 per cent higher revenue of £174mn
  • Earnings per share (EPS) more than doubles to 37.2p
  • Dividend per share hiked 25 per cent to 15p
  • Net asset value (NAV) per share rises from 343p to 374p
  • Net debt of £2.8mn well within low-cost borrowing facilities of £35mn

The cost of living crisis is proving a boon for diversified financial services group H&T (HAT: 453p), the market leader in UK pawnbroking, part of the alternative credit market that is shunned by mainstream lenders.

The group’s pledge book surged by more than 50 per cent to £100.7mn last year, lifting the unit’s gross profit 42 per cent to £63.7mn, or 62 per cent of the group total. It has continued rising since then to an all-time high of £104mn. House broker Shore Capital has factored in a pledge book of £118mn at the 2023 year-end, a figure that H&T’s chief executive Chris Gillespie is comfortable with. He also points out that new borrowers surged 40 per cent last year to account for 13 per cent of pledges offered, highlighting the fact that H&T provides a valuable source of credit to individuals who lack the financial status to borrow from high-street banks.

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