S&U PLC on Tuesday said it was performing strongly, though it reported a profit fall due to sharply higher impairment charges.

The Solihull, England-based lender, which is focused on motor finance and property bridging, said pretax profit fell 40% to £12.8 million in the six months to July 31 from £21.4 million a year ago.

Revenue grew 9.1% to £60.4 million from £55.3 million.

Impairment charges however ballooned to £18.9 million from £7.2 million, while net finance costs increased 42% to £9.6 million from £6.8 million.

S&U declared an interim dividend of 30 pence per share, down 14% from 35p a year ago.

Revenue for the Advantage Finance Ltd unit rose 3.4% to £49.1 million from £47.5 million, but pretax profit dived to £9.4 million from £19.1 million. This was amid an impairment charge increase to £18.1 million from £6.8 million.

Meanwhile, Aspen Bridging Ltd’s revenue surged 42% to £11.2 million from £7.9 million, with pretax profit jumping 42% to £3.4 million from £2.4 million.

Looking ahead, Chair Anthony Coombs said: ‘Half-year results for Advantage reflect a temporary adjustment to shifting market dynamics and evolving regulatory expectations. Nevertheless, the resulting internal reforms should provide greater certainty for renewed success. Meanwhile, in the more dynamic bridging sector, Aspen continues to perform strongly. We embrace the future with our usual cautious optimism.’

On September 19, S&U had said that it expects improvement in Advantage Finance’s performance in the second half via a plan to be implemented upon the anticipated removal of Financial Conduct Authority restrictions and modifications as a result.

S&U shares rose 5.7% to 1,754.75 pence each midday Tuesday in London.

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