PCF Group: Strong Trading & New Initiatives Support Growth

6th March 2020 | PCF Group plc

PCF, the AIM-listed specialist bank, will hold its Annual General Meeting (“AGM”) at 10.00am today at 1 Cornhill, London, EC3V 3ND. The meeting will also be available on a live video stream.

At the AGM, Chief Executive, Scott Maybury will make the following statement to shareholders:

“I am pleased to report that trading in the first five months of the current financial year has been strong and in line with management’s expectations.

“New business origination in the five-month period to 29 February 2020 was 30% ahead of the comparative period last year at £127m (2019: £98m). We are also pleased to report that the quality of originations has been maintained with over 79% (2019: 76%) of originations being in our prime credit grades. The lending portfolio has grown by 55% to over £395m as at the end of February 2020 (2019: £255m) and this is supported by retail deposits of £346m (2019: £202m).

“A key initiative for FY2020, which forms part of our strategy to further improve the credit risk profile of our business, was the launch of our automated prime proposition for consumer motor finance. After a trial with a small number of broker relationships in late 2019 the product and enhanced functionality were launched on 27 January 2020.

“In our first full month of the new product’s operation we can report that year on year, the comparative volumes for February show an increase in consumer motor lending of 80%. This has raised the prime credit quality statistics of this division in the month to 93%. This prime business attracts a lower net interest margin than our near prime originations but is expected to deliver both lower loan loss impairment charge and administrative expense. This is an exciting start for this product and proves our model to build portfolio scale and strong operational gearing in the medium-term.

“Our other business lines continue to grow. Business Finance volumes in the five-month period to 29 February 2020 increased 5% compared to the same period in 2019 with an increased proportion of the Azule broadcast and media equipment written on our own balance sheet. The bridging property finance portfolio as at 29 February 2020 was £21m, having only commenced business this time last year.

“In the period we have continued to invest in our operating platform, infrastructure and human resources to prepare the Group for our medium-term target of a £750 million portfolio by September 2022. This investment includes a recent premises move which provides headcount capacity and our employees with an excellent working environment.

“The world economy faces increased economic concerns over Covid-19 and there remains uncertainty over the UK’s transition to an independent trading nation. It is therefore important we maintain our cautious risk appetite and remain proactive towards these challenges.

“We have confidence in the short-term as we build on our market share in diversified markets and can take comfort from the £75m of unearned operating income, in respect of future years, already present on our balance sheet. In the medium-term our return on equity target of 15% remains in place. We look forward to providing a further update on 3 June 2020 when we will announce our half-year accounts for the six-month period ending 31 March 2020.

“Finally, I would like to bring to shareholders attention the latest corporate presentation which is available on our website or in hard copy for those attending the AGM in person today.”

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