Shares in motor and business-asset finance firm PCF Group (PCF: AIM) have jumped by 7% to 38p on above-average trading volume as the company unveiled a record increase in lending.

Originations are up 75% on the previous year at £148m, lifting the total loan book to £219m and putting it firmly on track to meet its 2020 target of £350m.

The move to a banking model earlier this year means a lower cost of funding which in turn means that PCF can afford to lend to more customers.

It has also allowed the company to be choosier about to whom it lends so 70% of its new business is in ‘prime’ credit.

This means less chance that the borrowers will default, which potentially leads to higher profits and better returns for shareholders.

Opening up new business avenues

Earlier this month PCF bought Azule, a UK market leader in leasing and funding to the broadcast and media industry.

Azule has been providing finance to the media sector for more than 20 years and like PCF tends to lend to prime credit grade customers.

In the year to June, Azule originated £54m of loans and reported a pre-tax profit of £0.8m. PCF expects the deal to add to earnings immediately once it receives full FCA approval.

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Issue Date: 22 Oct 2018