Pawnbroker Ramsdens reports 63% jump in profits as loan book grows
The loan book from Ramsdens’ pawnbroking division grew 18%.
Ramsdens has booked a 63% jump in profits as it doled out bigger loans to a steady flow of pawnbroking customers.
The pawnbroker, loan and currency exchange company reported £5.2 million in pre-tax profits for the six months to September 30, up from £3.2 million over the same period a year earlier, while revenues increased 18% to £21.8 million.
Ramsdens said it saw an 18% jump in the size of the loan book from its pawnbroking division to £6 million for the half-year, having already surpassed the previous full-year total of £5.97 million.
It increased as a result of Ramsdens doling out larger loans to customers over the period, while the number of customers stayed relatively static at around 29,000 – with the average loan standing at around £200.
The increased size of pawnbroking loans comes amid worries over growing consumer debt, as households look for ways to cope with added pressures as a result of Brexit-linked inflation which is currently sitting at five-year highs of 3%.
A report by trade association UK Finance last month showed that total credit card borrowing increased 7.8% on a year-on-year basis, compared to 7.3% in August.
Ramsdens has also reported an 18% rise in interest income to £3.5 million from its pawnbroking division, which includes earnings from jewellery that has been sold or scrapped after customers failed to repay and re-possess items they pledged in exchange for a cash loan.
The company said the rise in interest income was a result of the larger loan book, “improved retail activity” and higher gold prices.
The rise in precious metals prices in pound sterling terms has boosted the proceeds from scrapped or resold jewellery, though the weight of gold bought by the company over the period was “broadly in line” with the previous year.
Chief executive Peter Kenyon said: “Ramsdens has had a strong first half of the financial year with foreign currency exchange, pawnbroking and retail jewellery all showing good growth.
“The sterling gold price has been ahead of expectations and continues to benefit the purchase of precious metals and pawnbroking scrap proceeds.”
Ramsdens said it also saw a 15% jump in foreign currency exchange customers to 511,000 over the half year, saying improvements to its website had helped increase online sales 134% to £14.5 million – accounting for both its Click & Collect and home delivery services.
Shares in Ramsdens – which floated on the London stock exchange earlier this year – were up 3.8% or 7p at 191p in morning trading.
Ramsdens operates out of 127 storefronts across the UK, including four franchised outlets, mainly in the north east of England, Scotland and South Wales, and has an online presence focusing on its foreign currency exchange and jewellery sales.
Mr Kenyon said: “We have made a good start to the second half of the year and have good momentum as we head into the seasonally important Christmas period for jewellery retail.
“Ramsdens has a clear growth strategy which is underpinned by our trusted brand, first-class team and well invested core branch estate and the board remains confident of delivering further progress.”