S&U plc (LSE:SUS) delivered a strong second quarter as its lending portfolio expanded to a record level, supported by growth across its motor and property finance operations and continued solid credit quality.
Group capital receivables increased 20% year on year to £616 million, while borrowings stood at £285 million, remaining within the company’s existing funding facilities.
S&U is also approaching completion of a significant securitisation and refinancing programme intended to provide additional capacity for future expansion. Details of the new funding arrangements are expected to be announced alongside the group’s half-year results in late September.
Advantage Finance accelerates lending despite weaker market
Advantage Finance continued to outperform the wider UK motor finance market, with year-to-date deal volumes increasing by 50%.
Advances reached £105 million during the first half, despite the broader UK car finance market contracting by approximately 3%. Collections also improved, while bad debts were reduced by almost 20%.
Operational improvements are contributing to greater efficiency across the division. S&U reported a 50% increase in productivity within customer relations following the targeted introduction of artificial intelligence, alongside continued cost controls.
Management expects the financial benefits from these efficiency measures to become more visible during the second half of the year and into 2027/28.
Aspen Bridging grows loan book in subdued property market
Aspen Bridging experienced slower near-term profit growth as conditions in the UK property market remained subdued and regulatory pressures continued to affect the rental sector.
Despite these challenges, capital receivables increased to £208 million, representing growth of almost one-third compared with the previous year.
The business has adjusted its lending mix towards longer-duration loans for more experienced customers. While this approach results in slower repayment cycles, S&U said it helps maintain the quality of the lending book.
Late and beyond-term customers remained broadly stable at approximately 7% of Aspen’s portfolio.
Refinancing expected to support next stage of growth
Chairman Anthony Coombs pointed to S&U’s ability to perform consistently through differing economic environments. He also noted increasing interest from strategic and US investors in smaller UK financial businesses despite relatively subdued domestic sentiment.
The forthcoming securitisation and refinancing arrangements are expected to mark an important stage in the group’s development, providing a more flexible funding platform to support further expansion.
S&U’s investment outlook continues to benefit from strong reported profitability, an attractive earnings multiple and a relatively high dividend yield. However, inconsistent cash-flow generation and increased leverage remain potential constraints, while share-price technical indicators are broadly neutral.
More about S&U plc
S&U plc is a UK specialist lender operating primarily through Advantage Finance and Aspen Bridging.
Advantage Finance provides motor finance to consumers and has continued to expand deal volumes despite contraction in the wider UK car finance market. Aspen Bridging specialises in property-backed lending and has adapted its product offering to changing conditions in the housing and rental markets while maintaining a focus on credit quality.
The group currently has record capital receivables of £616 million and borrowings of £285 million against £330 million of available facilities. Its securitisation and refinancing strategy is designed to provide more flexible and competitively priced funding to support continued growth across its specialist lending businesses.
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