Profits at Novuna jump 25% to £130m thanks to sustainability strategy
A sharpened focus on technological innovation to deliver customer service and sustainable finance combined with an improved portfolio quality has helped Mitsubishi HC Capital UK PLC, one of the UK’s leading financial providers post record profit before tax (PBT) of £130m for the 2021/22 financial year, a significant uplift of 25% from £104m the previous year and the highest in its 40 year history.
Profits grew following a strong performance across all five of the Group’s divisions, despite variable trading conditions, suppressed demand for borrowing and supply chain upheaval.
New business volumes rose 21.6% to a record £4.1bn in FY 21/22, up from £3.3bn in the previous financial year, taking net earning assets to £6.5bn, up from £5.9bn in 2020/21 – all this in a remarkable year for the Group. In 2021 its parent company, Hitachi Capital Corporation merged with Mitsubishi UFJ Lease and Finance Group to Novuna in February 2022, all while contending with significant economic and logistical headwinds.
During 2021/22, Mitsubishi HC Capital UK PLC, which employs over 1,600 staff supporting nearly 1.3 million customers implemented major system enhancements within its commercial and consumer facing business divisions to improve credit decisioning and the customer experience, driving new business opportunities. This strategy improved the quality of the Group’s portfolio whilst reducing the Group’s charge for bad debt impairment by £14m, reflecting the stability in the credit quality of the business undertaken.
A Group-wide commitment to finance sustainable energy projects included £76m of funding for GRIDSERVE and a 173% expansion of its electric vehicle fleet through the company’s ambitious decarbonisation strategy. The Group also issued its first syndicated public green bond of EUR 325 million underlying its continued support from global markets and commitment to support the United Nations Sustainable Development Goals (SDGs).
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.”
Business unit performance – growth across the board in key sectors
Each of Mitsubishi HC Capital UK PLC’s five business divisions – Novuna Consumer Finance, Novuna Vehicle Solutions, Novuna Business Finance, Novuna Business Cash Flow and European vendor finance – returned pre-tax profits during the year, demonstrating continued resilience despite an uncertain economic environment.
Operating over 98,000 assets, Novuna Vehicle Solutions recorded pre-tax profits of £54.2m and posted the highest percentage growth of the Fleet News FN50 top 10 providers, with a fleet valued at £1.5bn, up 21% year on year, in turn consolidating its position as the 7th largest leasing company in the UK.
Novuna Consumer Finance, one of the UK’s leading consumer lending providers of retail point of sale finance and personal loans, generated a pre-tax profit of £58.6m. New business volumes closed the year at £2.3 billion, up £500m from last year’s posting of £1.8 billion. The business, which serves over 1.2 million customers continued to invest in technology implementing a proprietary soft search product for retail partners. 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.
Novuna Business Finance, which provides asset finance to SMEs and larger corporations across the UK, posted an annual pre-tax profit of £25m, up by almost a quarter. The business also grew its asset portfolio, which jumped by 11% £1.6bn, while new business volume rose 8% to £820m.
Novuna Business Finance has also played a pivotal role in supporting the sustainability ambitions of the Group, providing funding for a variety of renewables projects. The business launched a block discounting facility for sustainable technologies of up to £30m, while significant investments in the division’s operating systems to futureproof the business contributed to consolidate its position as the fifth largest asset finance provider for the UK’s 5.5 million SMEs.
Underpinned by its market leading digital onboarding platform, Novuna Business Cash Flow marked its return to profitability with an increase of 86% in the average current account per client, while annual gross earnings jumped by £7m to record levels.
A key pillar of the division’s successful income diversification strategy was the decision to pivot towards working with larger SMEs and corporate clients, which resulted in the onboarding of Novuna’s largest ever deal, a £10m funding line to a major corporate entity.
Active in 22 countries across Europe, European Vendor Finance saw a 12% growth in pre-tax profits to £3.1m with a 23% increase in new business volumes up to £249m. Trading as Mitsubishi HC Capital UK and Mitsubishi HC Capital Europe, the European Vendor Finance division focused on strengthening ties with Mitsubishi Group companies following the merger as well as continuing to support existing Hitachi relationships supporting Mitsubishi HC Capital UK PLC’s growth internationally.
