Non-Standard Finance bolsters finances by focusing on debt collection
Non-Standard Finance is focusing on its collection activity after cutting lending across its divisions during the coronavirus pandemic.
In a statement today, Non-Standard Finance said it would delay full-year results because of coronavirus. It maintained its collections performance had been robust despite the circumstances.
Last month the firm cut lending across its divisions to mitigate the effects of the outbreak on its financial performance. In the past four weeks, its lending volumes have been limited to smaller sized loans to key workers only.
Collections in April at its branch-based lending division, Everyday Loans, are running at above 90 per cent of the comparative pre-lockdown levels in the previous month.
Collections at its guarantor loans division are running at slightly below 90 per cent. The lender said a large proportion of collections occur towards the end of the month.
Face-to-face collections are usually made for Non-Standard Finance’s “Loans At Home”. Social distancing measures and the adoption of remote payment options means collections are running at 75 per cent of the expected level.
Positive cash flow for April
In a bid to preserve cash, Non-Standard Finance’s board suspended the payment of a final dividend last month. The lender said these actions, alongside a focus on collections, has meant the group has become cash flow positive in April after operating expenses.
The lender generated £3m of net cash in the first three weeks of April. As at 21 April, the group had net cash of £38.7m and gross borrowings of £245m. It also has access to additional borrowing facilities totalling £185m to fund future loan book growth.
John Cronin, financial analysts at Goodbody, said: “Overall, the delay to the annual results may raise concerns again, and while the collections performance in each of the businesses appears robust on the surface, the March comparison doesn’t give us great comfort in an Everyday Loans and a Guarantor Loans context – and the ‘expectation’ for home credit collections is unknown.”
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