Bank of Ireland’s motor finance subsidiary Northridge recorded a pre-tax profit of £58.2 million last year after revenues increased by 25%.
The finance firm, which is based at the Irish lender’s Belfast headquarters, reported a total operating income of £97.6m for the year ending December 31 2023, an annual increase of £19.5m.
The finance company said the uplift was primarily due to the full inclusion of income from its Cambridgeshire-based hire business Marshall Leasing, which Bank of Ireland originally acquired in 2017.
Northridge also cited “high disposal proceeds due to market conditions for second hand cars”.
The latest accounts for the finance business showed the company appeared to benefit from the higher interest rate environment last year, with ‘net interest income’ rising 29% year-on-year to £68.8m.
Despite factoring in a £7.5m impairment loss, Northridge Finance’s pre-tax profit still increased last year to £58.2m.
The finance company said the impairment loss “reflects additional provision requirements for high inflation and cost of living challenges”.
Northridge said new lending increased by around £400m (23%) in 2023 to £2.4 billion.
The 2023 annual report published by Companies House, shows the business gradually transitioning away from petrol and diesel cars.
The company said it cut the number of diesel cars it financed in 2023 from 37% to 33%, with finance for hybrid and batter electric vehicles rising from 6% to 9%.
Northridge said it is also continuing to transition its Marshall Leasing business away from petrol and diesel to alternative fuel vehicles (AFVs).
One third (34%) of the Marshall Leasing fleet is comprised of AFVs, an increase of 46% since 2022.
Originally established in Bangor during 1956, NIIB, as it was then known, was bought by the Bank of Ireland Group in 1984.
It later entered the Scottish market in 1999 and expanded into England and Wales in 2003.
The finance business was fully rebranded the business as Northridge Finance in 2016.
The latest financial report states that Northridge, along with other industry peers, continues to receive and review a number of complaints and court claims in relation to its historical commission arrangements, some of which are with the Financial Ombudsman Service (FOS).
“There is significant uncertainty around the scope and/or nature of these issues, related complained and of any remediation, if required, given the challenges to the interpretation and/or validity of complaints and the associated regulatory requirements,” states the report.
Northridge said the FOS found in favour of complainants in two decisions in January 2024 relating to other lenders.
It said the Financial Conduct Authority (FCA) believes this will prompt a significant increase in complaints from consumers to firms and the FOS.
The FCA announced a review of historic commission arrangements in the motor finance sector in January 2024, which could result in an industry-wide consumer redress scheme.
Northridge Finance said while it may incur charges from future complainants and court claims, “it is not considered that legal or constructive obligation has been incurred in relation to these matters that would require a provision to be recognised at this stage”.