TIDMPCF
RNS Number : 5618T
PCF Group PLC
26 March 2021
26 March 2021
PCF Group plc
("PCF", the "Bank" or the "Group")
Trading Update
In advance of its Annual General Meeting which will be held
later today, PCF provides a trading update for the first five
months, to 28 February 2021, of the current financial year.
Highlights
-- Continued focus on lending to better quality customers, with
new business volumes in line with management's adjusted
targets.
-- New business originations in the first five months of the
current financial year totalled GBP104 million (2020:
GBP127million).
-- This included GBP19 million of business placed by Azule with other lending institutions.
-- Record single transaction of GBP6.9 million placed by Azule.
-- Total loan book amounted to GBP440 million at 28 February 2021 (2020: GBP392 million).
-- The number of customers in forbearance continues to reduce
and their obligations currently stand at GBP20 million,
representing less than 5% of our portfolio (30 September 2020:
10%).
-- Retail deposits totalled GBP342 million (30 September 2020; GBP342 million)
-- 'Feefo' Platinum Trusted Service Award won by our Savings Team.
-- Operational transformation programme commenced.
Overview
We remain open for business and continue to finance consumers
and SME customers across all our lending divisions.
New business volumes of GBP104 million are in line with
management's current expectations and we continue to be cautious in
our underwriting whilst the economic outlook remains uncertain.
As a result, the Group lending portfolio increased slightly from
GBP434 million at 30 September 2020 to GBP440 million. Our
short-term objective is to maintain the portfolio around this level
until we judge that resuming stronger portfolio growth is prudent,
whilst continually improving its quality as we manage risk through
the credit cycle. Loan originations in our top four credit grades
increased to 93% in the period (September 2020: 85%) and, in the
month of February, it reached the record level of 100%.
Forborne loans, by value, currently represent less than 5% of
our portfolio, compared with 38% at the height of the pandemic last
May. This is a result of our prompt and supportive initial response
to Covid-19 forbearance requests, the use of automation to
efficiently deal with those requests and the high number of
customers who sought forbearance as a precautionary measure and
have since resumed making payments.
Consumer motor finance
The used motor vehicle finance market has proved resilient
through the period. In January, we introduced new rate and
commission charts to ensure that we complied with the most recent
guidance and rules from the Financial Conduct Authority. These were
well received by our introducers and we have seen increased
activity in recent weeks.
New business originations in the first five months of the year
have totalled GBP35 million, compared with GBP34 million in the
same period last year. 100% of new business originations were
written in our top four credit grades.
Our product offering and terms of business are well regarded
within the sector and, as we approach the time of the year when the
market typically experiences an uplift in trading, in particular
for leisure vehicles, we are confident that we will see buoyant
origination levels in the coming months.
As a result of the increased volumes in the last 18 months, this
division is growing and now represents the largest part of our
Group portfolio. At 28 February 2021, the divisional portfolio
totalled GBP179 million, compared with GBP143 million last February
and GBP168 million at 30 September 2020.
Levels of forbearance in this division continue to reduce and at
28 February 2021 totalled GBP3.9million, representing 2.2% of the
portfolio.
We remain alert to the risks of higher unemployment levels as
the Government's furlough scheme tapers off and have maintained
cautious underwriting terms in respect of loan to value and quality
of customer.
Business asset finance
New business originations in this division remain low, as SMEs
have continued to hold back on new investment or used the
Government's Coronavirus Business Interruption Loan Scheme for
their working capital and asset finance requirements. However, the
announcement of incentives to stimulate investment in the recent
Budget should lead to increased investment in the future and we
will be ready to assist our customers when they make their
investment decisions. In the meantime, we remain focused on prudent
underwriting on sensible terms, with 99% of new business
originations written in our top four credit grades.
New business originations in the first five months of the year
have totalled GBP21 million, compared with GBP56 million in the
same period last year.
At 28 February 2021, the divisional portfolio totalled GBP173
million, compared with GBP204 million last February and GBP184
million at 30 September 2020.
Levels of forbearance in this division continue to reduce and at
28 February 2021 totalled GBP11.1 million, representing 6.4% of the
portfolio.
Bridging property finance
This division continues to see good demand for its products and
has a healthy pipeline of transactions. Again, we remain focussed
on good quality transactions with prudent loan to values and
clearly defined plans for repayment, with 81% of new lending in our
top four credit grades.
New business originations in the first five months of the year
have totalled GBP27 million, compared with GBP18 million in the
same period last year.
At 28 February 2021, the divisional portfolio totalled GBP68
million, compared with GBP21 million last February and GBP60
million at 30 September 2020. The portfolio continues to perform
well, has no cases of forbearance and has not realised any
losses.
Azule finance
Our broadcast and media finance subsidiary, Azule, has been
particularly affected by the lockdown with TV, film, sports and
live events all severely impacted. However, in late December it
completed its largest ever transaction, financing a GBP6.9 million
LED video wall for an existing customer operating in the Disney
studio at Pinewood. The transaction was placed with two other
finance companies, generating substantial fee income.
As the Government's roadmap for the easing of social distancing
measures progresses, we expect Azule to see increased activity in
its chosen markets. In the period, Azule has focussed its broking
activity on assisting customers with successful applications under
the government CBILS scheme.
New business originations in the first five months of the year
have totalled GBP21 million, compared with GBP19 million in the
same period last year. GBP19 million of this business was placed
with other banks and finance companies and GBP2 million was written
on the Group balance sheet. 82% of business written on balance
sheet was in our top four credit grades.
At 28 February 2021, the divisional portfolio totalled GBP20
million, compared with GBP24 million last February and GBP22
million at 30 September 2020.
Forbearance
The number of customers in forbearance continues to reduce and
their obligations currently stand at GBP20 million, representing
less than 5% of our portfolio.
We have continued to provide support to our customers who have
required assistance as a result of the pandemic and it is pleasing
to see the vast majority of the accounts on which assistance was
provided have now returned to a fully performing status. Where
customers require continued forbearance over a longer term, we are
working with them to ensure that we provide tailored forbearance
which is appropriate for their individual circumstances.
We will continue to monitor the performance of our portfolio and
the status of customers in forbearance to ensure that our levels of
IFRS 9 provisioning protect the balance sheet whilst economic and
credit conditions remain uncertain.
Operational transformation programme
Following an internal review of our business processes, work has
begun to increase our use of automation and data-led decision
making across the business to ensure that our platform is scalable,
enabling us to benefit from further economies of scale. These
improvements will also enable us to grow in a cost-effective
fashion and provide a better experience for our customers and
introducers.
Balance sheet and treasury
PCF entered this crisis in a strong financial position. The
Group has access to the retail deposit market, wholesale debt
markets and Bank of England funding mechanisms. We continue to have
access to the Bank of England's Term Funding Scheme, which will run
until 31 October 2021, and we have used this as our primary source
of new funding in recent months. However, the retail deposit market
has not shown any signs of stress to date and continues to be
accessible for new and maturing savings products.
Our savings operation supports our four lending divisions
through GBP342 million of retail deposits. We continue to provide
our customers with high levels of service, as evidenced by our
achievement of receiving the 'Feefo' Platinum Trusted Service
Award, which is only available to businesses which have been
awarded the Gold Trust Service Award for three successive
years.
We continue to actively manage both capital and liquidity
through these challenging times to maintain a surplus position
ahead of our normal risk appetite.
The business continues to be cash generative and profitable.
Organisational changes and executive recruitment
Caroline Richardson joined PCF on 15 March 2021 as Group Chief
Financial Officer and will be appointed to the board once
regulatory approval has been received. Caroline replaces Nick
Price, who had been interim CFO since September 2020.
Caroline qualified as an accountant at PricewaterhouseCoopers
and has significant experience as a finance director, most recently
as Chief Financial Officer and Board Member at White Oak UK, where
she was responsible for the Finance and Treasury teams and helped
develop their response to the pandemic.
On completing the six-month review under the operational
transformation programme, Garry Stran has commenced his role as
Chief Operating Officer.
After a period of 27 years with PCF and as previously announced
on 4 March, Robert Murray is retiring from the business. We wish
Robert all the best in his retirement and thank him for his role in
the success of PCF Bank
Commenting on current trading, CEO Scott Maybury said:
"I would like to thank the PCF team for their efforts in this
prolonged period of disruption. In particular, I extend my
gratitude to Robert Murray, who retires from the Company after 27
years' service, for his tireless support over so many years and I
look forward to working with the new executive team we now have in
place.
We will continue to prioritise our customers and staff while
maintaining a cautious approach to loan origination. While the
outlook remains volatile and the exit route from the pandemic
remains uncertain, it is essential that we focus on loan book
performance and protecting the strong franchises we have in our
markets. We remain confident that we are well placed to take
advantage of opportunities in more prosperous times."
end
For further information, please visit https://pcf.bank/ or
contact:
PCF Group Tel: +44 (0) 20 7222
Scott Maybury, Chief Executive Officer 2426
Caroline Richardson, Chief Financial
Officer
Tavistock Communications Tel: +44 (0) 20 7920
Simon Hudson / Edward Lee / Tim Pearson 3150
Peel Hunt (Nominated Advisor and Broker) Tel: +44 (0) 20 7418
Andrew Buchanan / James Britton / Rishi 8900
Shah /
Duncan Littlejohns
Shore Capital (Joint Broker) Tel: +44 (0) 20 7408
Henry Willcocks / Guy Wiehahn / Antonio 4080
Bossi
About PCF Group plc ( www.pcf.bank )
Established in 1994, PCF Group plc is the AIM-quoted parent of
the specialist bank, PCF Bank Limited. Since commencing operations
as a bank in 2017, the Group has increased its lending portfolio
from GBP140 million to over GBP430 million. The Group continues to
focus on portfolio quality and lending to the prime segments of its
existing markets. The Group will continue to identify opportunities
to diversify its lending products and asset classes by setting up
new organic operations or through acquistion.
PCF Bank currently offers retail savings products for
individuals and then deploys those funds through its four lending
divisions:
-- Business asset finance which provides finance for vehicles, plant and equipment to SMEs;
-- Consumer motor finance which provides finance for motor vehicles to consumers;
-- Azule which provides finance to the broadcast and media industry; and
-- Property bridging finance which provides loans to companies
and sole traders investing in residential and commercial
property.
The Group has a track record of profitability and sustainability
through an efficient and scalable business model. Utilising its
technologically advanced platform, PCF Bank provides both
depositors and borrowers with a high level of service and a
straightforward, simple range of products tailored to suit their
needs.
Recently recorded video profiles of PCF's Property Bridging
Finance, Azule Broadcast Equipment Finance, and Savings divisions
are available at the Company's profile page on the London Stock
Exchange website:
https://profile.lsegissuerservices.com/PCFGroup/overview.
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END
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