MotoNovo is to move under the leadership of Aldermore’s chief executive officer, Phillip Monks, as South African parent FirstRand looks to integrate the car finance lender into the newly-acquired challenger bank.
FirstRand, which is waiting for shareholders’ and regulators’ approval on its £1.1bn bid for Aldermore, said MotoNovo was currently “undiversified from a product and market perspective”. Consequently, the group was seeking to fund new MotoNovo business through Aldermore’s deposit base and securitisation operations.
Motor Finance contacted FirstRand to ask what the degree of integration involved would be, and whether the two businesses would keep separate brands. At the time of writing, FirstRand had not replied.
FirstRand added that, following the integration, liquidity from MotoNovo’s domestic balance sheet would be able to be redeployed in South Africa, where FirstRand also has a vehicle finance business.
The FirstRand group said: “FirstRand will work closely with Aldermore’s management team to identify growth opportunities that Aldermore can explore under FirstRand’s ownership.
“FirstRand already sees the potential to broaden the business model of the combined platform. FirstRand also believes further UK growth can be unlocked through cross-selling the current product offerings across the MotoNovo and Aldermore customer bases, and, in the longer term, developing further financial services offerings.”
The group added it had “carefully considered” the implications of future UK macroeconomic scenarios for the broader group.
Aldermore launched a Leeds-based specialist car finance team in January, two months after news of the bid from FirstRand emerged.
MotoNovo new business grows as lending takes conservative stance
New business within MotoNovo grew 68%, reaching ZAR 37.3bn (£229m) in the six months to December 2017.
The company said it was continuing to grow its book while keeping a “continued focus on reducing higher risk business”. It added that new business saw slower growth due to termination of relationships with unnamed distribution channels “showing elevated risk”.
Net interest income before impairments was ZAR 973m for the period, down 28% year-on-year.
Non-performing loans (NPLs) for secured lending rose 33% year-on-year for the six months to December, reaching ZAR 263m. This pushed impairment charges to ZAR 329m, up 48%.
The company said the rise in NPLs was driven by book growth, increased impairment conservatism and deterioration in arrears.
It said the higher number “was largely expected given the historic book growth and the impact of business written before risk cuts in the prior year”.