Yorkshire lender suffers "most challenging period in the group’s history"

Leeds-based Non-Standard Finance (NSF) said Covid-19 had a major impact on the group in the second quarter as the lockdown led to lower levels of lending and collections.

The group made a normalised pre-tax loss of £9.9m in the six months to June 30, down from a normalised pre-tax profit of £6.6m in the previous first half.

However, the firm also swallowed a £91.3m exceptional charge, which included a £15.8m provision for a customer redress programme at the request of the FCA.

There was also a non-cash write-off of all remaining goodwill assets and acquired intangibles totalling £75.5m, which resulted in a pre-tax loss of £102.7m.

John van Kuffeler, group chief executive, said: “The first half of 2020 has been the most challenging period in the group’s history.

"As well as managing the significant operational and financial challenges presented by Covid-19 that have impacted the entire UK economy, the group has also developed a programme of customer redress for certain of its guarantor loans customers."

He said that while these factors have placed a significant strain on the group’s resources, the firm has £70m in cash and is trading broadly in line with expectations. Alchemy, the group’s largest shareholder, has confirmed that it remains supportive of a substantial equity issue to strengthen its balance sheet and enable a return to growth.

“The non-standard lending sector provides an invaluable lifeline for many consumers that would otherwise be unable to manage the peaks and troughs in their income and expenditure," he added.

"We believe that ensuring credit continues to flow to the 10 million UK adults that are unable to access mainstream lenders has never been more important, particularly as the FCA has recently stated that 12 million UK adults are struggling to pay bills due to the pandemic."