S&U warns on full-year profits

"The intemperate economic climate in Britain surrounding these unfortunately persists," it said. "Whilst we continue to invest in the receivables which drive our future profits, we do so with caution."

The company now expects group pre-tax profit for the year to the end of January 2024 to be 10% to 15% below consensus expectations of around £38m.

S&U said loan advances in motor finance lender Advantage were 7% lower than last year. Meanwhile, live monthly repayments at Advantage for the second half of the year were 90% of due, down from 94% in the first half.

Although Aspen cumulative repayments are no less than 50% up on last year, more recently that rate of increase has slowed, it said.

"Although these trends, particularly at Advantage, have largely been confined to the last quarter, a prudent approach to their likely effect on collections will have a temporary impact on profitability," the company said.

"In particular, the reduction in the rate of collections has necessitated increased provisioning under the IFRS9 accounting standard."

S&U struck a more upbeat note on the outlook however, saying it expects a "solid" rebound, hence its continued funding investment in both businesses of £15m during the period.

Chairman Anthony Coombs said: "Faced with an array of challenges ranging from weak consumer confidence, cost-of-living pressures, funding costs and regulatory activity, 2023 has not been a vintage year for either S&U or the specialist financial services sector.

"Given the underlying strength, resilience and expertise of our group, I fully expect a resumption of S&U's habitual and robust profit growth in the years to come."

At 0838 GMT, the shares were down 7.8% at 1,936.97p.