PCF Group plc, the AIM-listed specialist bank, today announces its preliminary unaudited results for the year ended 30 September 2020. The Board is pleased to report full year results which show resilience, both financially and operationally, in the most extraordinary of years. We have remained cautious and prudent, focussing our efforts on supporting our customers and ensuring the well-being of our colleagues.

Highlights:

• Underlying profit before tax* of £3.9 million (2019: £8.0 million)
• Underlying profit reduction driven by credit impairment charges of £7.8 million (2019: £2.2 million) including the incremental cost of potential Covid-19 credit losses
• Statutory profit before tax was £2.1 million (2019: £8.0 million ) including a partial impairment of goodwill on our investment in Azule of £1.75 million
• Focus on portfolio quality with 85% (2019: 74%) of current year originations in the prime segment of the credit spectrum
• Loan book growth to £434 million (2019: £339 million)
• Portfolio forbearance continues to fall and is now £23 million, less than 7% of the loan book at 30 November 2020 (May 2020: 34%)
• Operating income increased by 19% to £26.5 million (2019: £22.3 million)
• Net Interest Margin (‘NIM’) reduced to 6.9% (2019: 7.8%) reflecting the focus on higher quality lending partially offset by a cheaper cost of funds
• Cost to income ratio was unchanged at 55.6% (2019: 55.6%)
• Strong new business originations of £270 million (2019: £276 million) comprising
  • New business origination for ‘own portfolio’ increasing by 10% to £244 million (2019: £222 million)
  • £26 million (2019: £54 million) of brokered Azule new business origination, generating commission income
  • Includes property bridging finance lending of £60 million in first full year (2019 9 months: £14 million)
• Retail deposits total £342 million (2019: £267 million) with over 7,950 retail deposit customers (2019: 6,250)
• Drawings of £62 million (2019: £25 million) under the UK Treasury Term Funding Schemes, in support of the SME sector
• Dividend will be considered at the time of the FY21 Interim Results
• Earnings per share of 0.6p (2019: 2.7p)
• Underlying return on equity** of 5.4% (2019: 12.6%)
• Statutory return on equity of 2.5% (2019: 12.6%)
• CET* Capital Ratio of 17.7% (2019: 18%)
• Liquidity Coverage Ratio of 673% (2019: 553%)

* Statutory profit before tax £2.1

Impairment to goodwill £1.8

Underlying profit before tax £3.9

** Underlying return on equity adds back impairment of goodwill

Tim Franklin, Chairman, commented:

“This has been a challenging year for people and businesses across the UK. I am incredibly proud of the support that PCF Bank has provided to both our customers and colleagues.

“Against this backdrop, we continue to be profitable and have made progress towards our longer term business targets: growing the size of our portfolio, moving further into the prime segment of our lending markets and increasing the diversification in our loan book.

“Whilst forbearance across the loan book has continued to fall, we are aware that there may be further challenges in 2021. However, we are optimistic that our continued investment in PCF Bank, alongside the talent at the bank, place us in an excellent position to emerge more strongly as economic conditions stabilise.”