Novuna Business Finance, a specialist in providing asset finance solutions for SMEs and larger corporations across the UK, has reported pre-tax profits of £23.4 million, marking a 5.9% increase from the previous year.

This achievement comes despite a significant £29.2 million rise in funding costs due to unprecedented rate hikes over the past 12 months. The company’s performance contributed to the overall Group pre-tax profits of £126 million.

The company, known for its asset finance, stocking, block discounting, and sustainable project finance solutions, saw a £27.1 million increase in net earning assets, bringing the total to £1.8 billion. This cements its position as the largest non-bank asset finance provider in the UK.

Facing an 80% increase in funding costs from £36.4 million to £65.6 million in FY23/24, Novuna Business Finance managed to maintain its operating costs at the previous year’s level. The company also improved the quality of its portfolio, reducing bad debt by over £3 million. These measures, along with pricing adjustments on new business, led to a 23.1% revenue increase, generating an additional £25.8 million and achieving £860 million in total new business volumes.

The company’s emerging Project Finance channel secured over £100 million in new facilities, focusing on energy storage and infrastructure projects through tailored financing. This channel has become the fastest-growing market route for Novuna, supporting Mitsubishi HC Capital UK PLC’s goal of having 20% of Group assets connected to climate action and affordable clean energy by March 2025.

Novuna’s direct market routes, offering larger transactions and credit lines, saw a 20% increase in business volumes in FY23/24. The manufacturer and dealer channel also experienced significant growth, with a 21% increase in the stocking portfolio and a 6% growth in B2B finance new business volume.

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The broker channel, a long-standing route to market, achieved £422 million in new business volume in FY23/24, maintaining its position as Novuna Business Finance’s largest market route.

Investments in the Mercury customer application and management portal have enhanced customer support, providing quick quotes and enabling introducers to manage the full lifecycle of their applications, resulting in faster underwriting processes.

Geoff Maleham, Managing Director at Novuna Business Finance, stated, “Despite grappling with a turbulent trading period with unprecedented margin pressures, our business has demonstrated its resilience by maintaining a low-cost base and successfully leveraging our diversified portfolio with three distinct routes to market. We achieved rapid growth in the project finance channel, a testament to the division’s efforts to become the go-to provider in the sustainability space.”

SMEs and the sustainability imperative: Q&A with Novuna Business Finance’s Head of Insight