Novuna Consumer Finance Achieves £58.6m Profit Despite Challenging Market Conditions

Friday 10th June 2022

  • Novuna Consumer Finance, the retail and personal lending arm of Mitsubishi HC Capital UK PLC, reported pre-tax profits of £58.6m in FY21/22, contributing to record profits of £130.0m for the Group
  • New business volumes grew £500m to £2.3 billion, despite difficult market conditions
  • Novuna Personal Finance, the division’s personal loans business, lent £940m in FY 21/22, a 45% increase in business volume

10 June 2022: Novuna Consumer Finance, one of the UK’s leading retail point of sale and personal lending providers, is today reporting another strong year, with pre-tax profits in FY21/22 of £58.6m.

The results were achieved despite significant headwinds impacting both the business and its 3,500 retail partners across the course of the year, with successive lockdowns and social distancing restrictions dampening demand for personal loans and hitting high street footfall.

Following a challenging start to FY21/22 Novuna was swift to identify and capitalise on emerging pockets of potential as Covid-19 restrictions eased and consumer confidence recovered, albeit slowly, due to a release of pent-up demand. This approach resulted in buoyant sales growth across key retail sectors, including furniture, electrical and home improvements. New business volumes closed the year at £2.3 billion, up £500m from last year’s posting of £1.8 billion.

The growth in online retail activity, accelerated by the pandemic, helped to drive a 34% increase in lending volumes via e-commerce channels - over £200m - onboarding and integrating over 100 new retailers over the course of the year.

The business, which serves over 1.2 million customers continued to invest in technology implementing a proprietary soft search product for retail partners.  This provides flexible, bespoke tailoring for retailers to build the finance offers based on their customers’ disposable income.

Novuna’s personal loans business, also performed strongly. Novuna Personal Finance exceeded budget forecasts, despite ongoing supressed demand for unsecured borrowing in a contracted market, achieving a 45% increase in volume, lending over £940m, up from £648m in FY 20/21in turn cementing Novuna’s position as a top 10 provider of personal loans in the UK (reference Mintel). Novuna Consumer Finance also expanded its offering into sectors aligned with the Group’s ambitious sustainability strategy, including funding for electric vehicle home charging points, with plans to escalate the proposition to additional lenders in the renewable energy market in the year ahead.

In February, the business underwent a strategic rebrand from Hitachi Capital Consumer Finance to become Novuna Consumer Finance, following the merger in 2021 of its parent company, making it part of Mitsubishi HC Capital Inc., one of the world's largest and most diversified financial groups.

Vincent Reboul, Managing Director at Novuna Consumer Finance, said:

The last 12 months have been particularly challenging for the sectors in which we operate, but today’s results demonstrate our ability to evolve our offering quickly to meet the needs of our customers, whilst still delivering outstanding customer service. 

“Despite difficult market conditions we delivered over £2bn in new business, as we continued to invest in new technology platforms enabling better customer experiences, optimised credit decisioning and delivering operational efficiencies. We also successfully launched our new brand in the UK retail and consumer lending space with a fresh image which resonates with the way we do business. The results and our continued investment in our people mean we are well placed to continue to cement our position as one of the UK’s leading providers of consumer credit despite the prevailing challenges weakening consumer confidence.”

Record Group profits for Mitsubishi HC Capital UK PLC

At Group level, Mitsubishi HC Capital UK PLC recorded a pre-tax profit of £130.0m for the financial year, a 25% increase from £104m the previous year.

The results cap off an extraordinary year for the Group, which completed a successful merger of Mitsubishi UFJ Lease and Finance Company Limited and Hitachi Capital Corporation in 2021, and subsequent rebrand of the respective divisions in February 2022, all while contending with major economic and logistical headwinds.

The Group’s new business volume over the period also rose to record highs, with total volumes of £4.1bn, a 21.6% annual increase from £3.3bn the previous financial year. This uptick helped to boost net earning assets to £6.5bn, up from £5.9bn in 2020/21.

Robert Gordon, CEO of Mitsubishi HC Capital UK PLC, said:

Our exceptional results with record profits and new business volumes are testament to the strides we have made to meet and exceed customer expectations despite the headwinds of the past 12 months.  

“We have continued to invest in our products, our technology and our people.  Increasing headcount by 4%, gaining market share in key industry sectors whilst maintaining our high customer satisfaction ratings, we’re consistently providing our customers with an outstanding level of service which is the cornerstone of our business.

“At the same time, we repositioned our business in market, undertaking the largest rebranding exercise in our 40 year history, seamlessly transitioning to our new Novuna trading style, embarking on an exciting new era that resonates with our customers.

“The last twelve months has demonstrated our resilience and our ability to adapt, which combined with a strong equity base, access to global lines of credit, and a focus on portfolio quality, puts us in a strong position to continue to grow and diversify the business, despite the backdrop of uncertainty in the current economic climate.”

- ENDS –