Distribution Finance Capital Holdings, a London-listed lender that provides working capital to dealers and manufacturers across the U.K., has announced that it expects its full-year performance to surpass expectations. This optimistic outlook comes after the company reported a rise in new loan origination during the first half of 2023.
Although the lender did not specify its management expectations, it reaffirmed its year-end loan book target of between £550 million and £600 million ($711.3 million-$775.9 million). Additionally, Distribution Finance Capital Holdings stated that it anticipates continued profitable growth.
The company noted that it expects its stock turn to increase in the coming months, gradually approaching its 150-day historical average. It has observed early signs of tightening demand and discretionary spending by end-users for dealers’ products. Furthermore, some manufacturers associated with Distribution Finance Capital Holdings have reduced production capacity over the summer months.
During the six months ended June 30, new loans amounted to £607 million ($785 million), a significant increase compared to £439 million in the same period the previous year. The company’s loan book exceeded management expectations and reached £519 million, marking an 18% growth.
Distribution Finance Capital Holdings emphasized that its net interest margin remains above its 6% target, thanks to fluctuations in U.K. base rates. It anticipates that as base rates decrease over the medium-term, its net interest margin will revert to and maintain its target.
Despite the general economic uncertainty caused by high interest rates aimed at curbing inflation, Chief Executive Carl D’Ammassa expressed cautious optimism about the company’s second-half performance.
