Record profits at niche home credit and motor finance provider S&U have been hailed as signalling a return of consumer confidence and a sign of a recovering UK economy.
Chairman of the Solihull-based company, Anthony Coombs, told the Post: “I think the prognosis is improving for the British economy.
“There are still a lot of imbalances - we are not exporting as much as we should be, consumer spending is still a large part of GDP and we still a lot of debt.
“But real incomes are beginning to rise slowly after falling in the early years of the recession and confidence is coming back. Employment is continuing to rise and that will benefit our business.”
Mr Coombs spoke following the publication of S&U’s results, which saw pre-tax profits of £17.3 million for 2013/14, a 21 per cent increase on 2012/13.
Earnings per share were up by up 22 per cent at 113.2p, while the firm’s revenues saw an 11 per cent increase to £60.8 million.
The results meant a total dividend of 54p, representing a 17 per cent increase, with assets increasing by 14 per cent to £69.4 million.
The majority of S&U’s profits (£11.5 million) came from its motor finance arm, representing a 42 per cent increase on the previous year. That came about as a result of a 26 per cent revenue growth.
Home credit profits were slightly down at £5.8 million, though that part of the business’s performance saw an improvement in the second half of the year.
The group said it had increased staff numbers to around 900, had opened two new home credit new branches during the year and planned further growth in motor finance.
Mr Coombs said: “We are very pleased about the results and pretty confident about the future.
“Like anything it’s all about the kind of service we give to our customers - home credit and motor finance. That is the strength of our market position.
“With motor finance it’s all about the service we give to our brokers but really it is customer service that drives that whole business.”
Speaking about increased consumer confidence Mr Coombs added: “The inflation figures are coming down and we have seen people’s disposable income going up.
“We have seen an uptake in customer confidence, not just motor finance but home credit for the last quarter of last year too.
“People are a little more confident than they were. That doesn’t mean they are going to rush out and take out loans with home credit or motor finance as they did in the noughties - but we wouldn’t want them to.
“We have always said we want sustainable growth in terms of the way we act responsibly, particularly in the home credit field.
“We only do more business with customers if they can afford to repay and can demonstrate that to us, both with income and outgoings and their previous payment record.”
Looking ahead Mr Coombs said he expected bigger growth in S&U’s motor finance arm but that he expected home credit to grow also.
“The major growth part of our business is in the motor finance business - home credit is a more mature business,” he said.
“Historically there are low levels of growth in home credit but we are seeing a slight uptake in growth rate and hopefully increases in profitability.
“We are introducing new products and attracting a slightly different sector of customer in addition to retaining existing customers.”
He added: “Although we introduce new products, particularly motor finance, we do stick to our last.
“We’ve been in this business for 75 years and have avoided the ups and downs and swings and arrows of outrageous fortune.
“The only reason for that is that we stick to the very careful and conservative approach to financing, to underwriting new business, a progressive approach to building the business and keeping high standards of customer service. I know it is a truism but this is crucial to any business and that is what we want to do.”