PCF Bank’s consumer motor finance portfolio saw advances shrink 3% in 2017, a slowdown that the group regarded as “not unexpected”.
Chief executive Scott Maybury attributed the result to intense competition, falling new vehicles sales and the prevalence of PCP as the public’s product of choice, which PCF Bank does not offer.
Maybury added that PCF’s “more expensive” model of relying on wholesale banking debt to raise capital, before gaining authorisation to hold retail savings in December 2016, meant that the group was “not prepared to sacrifice margin to compete”.
Lower origination for the consumer vehicle finance lending book, which still grew 2.8% to £72m, ran counter to wider group trends, where good results in the asset finance arm, PCF’s other main field of operation, pushed the group’s lending portfolio up 20% from 2016, to £146m.
Maybury said: “The reduced cost of funding through retail deposits increases our ability to access a greater part of that prime lending sector and will provide the driver for accelerated portfolio growth. We are targeting organic growth of the portfolio to £350 million within three years.
He said that PCF would progressively move its portfolio towards the prime segment. “This strategy is expected to deliver significant portfolio growth which will be complemented by our direct marketing presence in the commercial vehicle market, a drive to increase our levels of repeat and returning customers and an increased digital marketing presence,” he said.