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(Alliance News) - Distribution Finance Capital Holdings PLC on Wednesday said it expects 2023 profit to beat expectations, citing strong trading in the final quarter of the year.
Shares in the Manchester, England-based specialist bank were up 6.7% at 24.00 pence each in London on Wednesday morning.
Distribution Finance expects pretax profit for 2023 of GBP3.0 million, exceeding its prior expectations of GBP2.0 million, and more than double the GBP1.3 million reported in 2022.
The lender noted continued momentum in its fourth quarter, citing loan book growth for the tenth consecutive month. Additionally, stock days in the fourth quarter "extended in line with seasonal expectations to 174 days, but still below historical norms for the dealer restocking period", it said.
Back in November, Distribution Finance said it expected to report "no less than" GBP2.0 million in pretax profit for 2023, despite having delivered a GBP3.2 million profit in the first half alone. This was "in light of any expected credit loss provision in relation to RoyaleLife".
RoyaleLife, which has been a customer of the bank since 2018, went into administration in October. At the time, Distribution Finance believed it would be repaid once RoyaleLife's refinancing was complete.
However, Distribution Finance was since made aware that "RoyaleLife's financial situation and operation is much opaquer and more complex than originally determined". This, it said, is adversely impacting secured lenders and creditors to a greater extent than previously anticipated.
Distribution Finance's loan book at December 31 was GBP581 million, up more than 32% over the course of the year, with new loan origination for the year increasing by almost 20% to GBP1.2 billion from GBP1.0 billion in 2022.
The bank added that its dealer customers grew to 1,182 from 998 in 2022, with total credit lines up 26% to GBP1 billion from GBP817 million a year ago.
It added that despite "the macro-economic challenges and higher interest rate environment", its overdue accounts performed consistently well in 2023.
Distribution Finance will publish its financial results for 2023 in April.
Chief Executive Officer Carl D'Ammassa said: "2023 has been another strong year of growth and demonstrable sustainability in profitability. Our products and services continue to resonate with our borrowers and depositors, allowing us to achieve ten consecutive quarters of loan book growth. We have the capital capacity to grow our loan book to more than GBP800 million without the need for a Tier 1 equity raise, underpinning our confidence about our medium-term growth path as we look to support more customers and become a multi-product lender across the niche sectors in which we operate."
By Sabrina Penty, Alliance News reporter
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