The general assumption is that with discretionary incomes shrinking and the UK on the down-leg of the credit cycle, the likes of Non-Standard Finance (NSF) might struggle to keep loan impairments in check, even if the potential pool of clients is expanding. But John van Kuffeler, the sub-prime lender’s chief executive, reckons that the group’s targeted demographic isn’t feeling the pinch from these twin dynamics – it’s primarily a middle-class phenomenon, he suggests.
But even if it did amount to a structural balancing act, the group appears to be coping admirably, indicated by a 37 per cent (pro forma) expansion of the loan book, coupled with a 420-basis point reduction in the level of impairments (18.8 per cent) for the branch-based lending business as a proportion of revenue, while the group rate fell 3 percentage points to 25.9 per cent.
There was progress across the board, with strengthening profitability at the home credit business, complemented by a steep rise in the number of self-employed agents and active customer. The group’s branch network recorded a 22 per cent hike in adjusted operating profits, despite costs associated with 11 new openings, but perhaps the most notable initiative was the August 2017 deal to acquire George Banco, which has positioned NSF amongst the market leaders in the fast-growing UK guarantor loans segment.
JPMorgan Cazenove gives adjusted pre-tax profits of £16m for the December year-end, giving EPS of 4.08p, rising to £28m and 7.22p in 2019.
| NON-STANDARD FINANCE (NSF) | ||||
| ORD PRICE: | 60p | MARKET VALUE: | £187m | |
| TOUCH: | 58.2-60p | 12-MONTH HIGH: | 85p | LOW: 49p |
| DIVIDEND YIELD: | 3.8% | PE RATIO: | NA | |
| NET ASSET VALUE: | 68p* | LEVERAGE: | 5.2 | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2017 | 46.3 | -4.2 | -1.11 | 0.5 |
| 2018 | 75.1 | -2.6 | -0.66 | 0.6 |
| % change | +62 | - | - | +20 |
| Ex-div: | 20 Sep | |||
| Payment: | 17 Oct | |||
| *Including intangible assets of £153m, or 49p a share | ||||
