Distribution Finance raises outlook after strong first half

(Sharecast News) - Distribution Finance Capital reported strong first-half growth and raised its full-year outlook on Thursday, as it posted higher profits and record lending volumes. The AIM-traded specialist lender said profit before tax rose around 20% to £9m in the six months ended 30 June, up from an adjusted £7.5m a year earlier.

New lending grew 17% to a record £828m, supported by £1.4bn of facilities and an expanded network of 1,491 dealers.

Its loan book increased 21% year on year to £728m, while the net interest margin remained strong at 7.9%, well above its 6% target.

DF Capital said it maintained tight arrears control, with balances more than one day past due at just 0.9% of the loan book, contributing to a low cost of risk at 0.63%.

Retail deposits climbed to £688m from about 15,500 accounts, while adjusted earnings per share rose to 3.8p from 3.0p.

Adjusted tangible net asset value per share rose to 70.2p from 59.6p.

"The group has made great progress in achieving our strategic ambitions and enjoyed another period of growth which underpins the significant increase in overall profitability," said chief executive Carl D'Ammassa.

"We continue to scale the bank efficiently and the launch of our asset finance product will significantly expand our addressable market opportunity."

The group said it had now launched its asset finance proposition after securing consumer lending authorisation, with more than 75 dealers onboarded and the first loans issued.

It expectwd to close the year with a loan book of £750m to £800m, and said it had lending capacity of around £950m, with a clear path to £1.3bn without raising additional Tier 1 equity.

DF Capital said it now expected full-year profit to be materially ahead of current market expectations, with upgrades to 2026 forecasts also anticipated.

D'Ammassa said that would support its medium-term target of a £1.3bn loan book and a mid-teens return on equity by 2028.

At 1405 BST, shares in Distribution Finance Capital Holdings were up 9.7% at 54.85p.

Reporting by Josh White for Sharecast.com.