S&U shares jump as bank predicts profit ‘resurgence’
Shares in specialist lender S&U rallied as markets opened on Tuesday after the bank said its “resurgence in profitability” had begun to materialise.
The London-listed firm’s stock was up over three per cent in early trading to 1,940.
The jump came after the lender provided an upbeat trading update, anticipating building momentum for the second half of the year.
S&U pointed to the Supreme Court’s motor finance ruling as providing deeper clarity and certainty to operations.
Advantage – the bank’s car financing arm – “outpaced” the average national revival in the market of a six per cent increase in volumes.
S&U blasted the Financial Conduct Authority in the second half of 2024, blaming the watchdog’s regulatory pressure for the “uninspiring performance” of its motor finance business.
As the UK’s top Court handed lenders a partial win in the car finance case, S&U’s chair Anthony Coombs hailed the “common sense” verdict.
Coombs told Morning Wire there had “definitely been a change of tone and tenor” at the Financial Conduct Authority, which he “hopes persists because it is in the government and indeed the economy’s interest”.
The bank’s chair said on Tuesday: “The skies are now brighter for a return to steady sustainable growth than at any time since the pandemic.”
S&U praises early Mansion House wins
The bank said in its trading update on Tuesday that Rachel Reeves’ Mansion House speech “does appear, at an early stage, to have had an effect”.
The Chancellor was bullish in her deregulation ambitions, urging watchdogs to “take up the call” of regulating for growth rather than “bend to the temptation of excessive caution”.
Reeves said regulation was a “boot on the neck of businesses” – a statement that has reportedly landed her in hot water with the Bank of England but was warmly welcomed by S&U.
S&U said should it be “persisted in, this will provide the consistency and certainty for which we have long called and will attract capital investment into motor finance thus sharpening competition and benefiting customers.”
However, the boss has also warned about the risks of an additional bank tax.
Earlier this month, Coombs told Morning Wire: “Given the fragile nature of consumer confidence, still in negative territory, massively negative territory. My view is [Reeves] must step very carefully, and she’s got to avoid new taxes, if possible.
“No doubt about that”.
The bosses of the UK’s Big Four banks – Lloyds, Natwest, Barclays and HSBC – cautioned the Treasury on targeting lenders for a cash grab last month.
It came as the monetary reform think tank Positive Money suggested a sector hike of £11.3bn on the top banks to fund recent U-turns by the Labour government.