Vector Capital trading well in 'year of consolidation'

Commercial lending specialist Vector Capital said in an update on Monday that its loan book stood at £48.6m at the end of March, with an average balance of £51 million over the three month period.

The AIM-traded firm said the figure reflected planned redemptions of £7.8m, and new loans advanced totaling £3m during the quarter.

It said its average loan-to-value ratio at the end of the period was 57.2%.

Vector Capital's board, in line with its 2022 annual report, said it considered 2023 to be a year of consolidation.

The company said it was aiming to strengthen its position in a lending market still grappling with rising interest rates and persistent inflation.

Despite those challenges, Vector said it remained well-positioned with a strong balance sheet, solid relationships with its broker network, and continuous support from wholesale and specialist lenders.

To navigate the impact of higher interest rates on borrower affordability, the firm said it was exercising caution in new lending.

It added that redemptions had occurred as expected, which it described as an encouraging outcome given the current environment.

Additionally, Vector Capital reported robust levels of enquiries and a healthy pipeline of potential lending opportunities.

“I am pleased with our first quarter trading performance in the context of the planned redemptions and new loans advanced during the period,” said chief executive officer Agam Jain.

“While at the margins some borrowers are struggling to adapt to the current market conditions, and transactions are generally taking longer to close, our pipeline of new loan opportunities is encouraging.

“We have the proven strength and resilience of the loan management systems, and the backing of our wholesale funders that underpins our ability to re-start the growth trajectory once interest rates stabilise.”

At 0852 BST, shares in Vector Capital were up 2.67% at 38.5p.

Reporting by Josh White for Sharecast.com.