Doorstep lender Non-Standard Finance teetering ‘on the brink’ of collapse due to pandemic
A major doorstep lending group has warned its future hangs in the balance because of the effects of the coronavirus pandemic.
Non-Standard Finance (NSF), which owns the Everyday Loans, Loans at Home, George Banco and Trust Two brands, said there was ‘material uncertainty’ surrounding its ability to keep operating.
Shares fell 30.2 per cent to a record low of 8.03p, having been trading at close to 70p early last year.
On the brink: Non-Standard Finance, which owns the Everyday Loans, Loans at Home, George Banco and Trust Two brands has warned its future is hanging in the balance
Just over a year ago, the firm was boldly pushing ahead with a £1.3billion hostile bid for rival Provident Financial.
But yesterday it reported a loss before tax of £76million for 2019, after forking out £12.8million of fees relating to the failed Provident deal and writing down the value of its businesses.
Chief executive John van Kuffeler said: ‘The last 18 months have been difficult and disappointing with the failure of our offer for Provident Financial; the fall in sector values necessitating large write-downs in the values of our three principal subsidiaries and the Covid-19 pandemic which has paralysed the UK economy.’
As consumers cut back on their spending during lockdown, NSF said it had seen a ‘sharp downturn’ in lending.
Van Kuffeler added that so far, since lockdown, loan collections had remained robust at around 86 per cent of previous levels.
But he warned the economic chaos and job losses which the pandemic has caused would mean many customers would become unable to pay back their loans.
If collections fell by another 65 per cent, NSF said it would run out of cash – though its directors added that they thought this was unlikely. There was one silver lining: the pandemic could increase its customer numbers.
Van Kuffeler said: ‘As the recession begins to bite, it is expected that more of the population will be unable to borrow from either their clearing bank or other mainstream lenders.’
But John Cronin, an analyst at brokers Goodbody, said: ‘NSF is at the brink.’