UK pawnbroker Ramsdens Holdings Plc expects its loan business to continue growing this year as the cost-of-living crisis hits British customers.
(Bloomberg) — UK pawnbroker Ramsdens Holdings Plc expects its loan business to continue growing this year as the cost-of-living crisis hits British customers.
The retailer, which has more than 150 shops offering pawnbroking services and selling new and second-hand jewelery, reported a gross profit of £38.2 million for the year ending September 30, up 72% from last year. The results were also helped by a strong rebound in the company’s foreign exchange business as travel restarted after the pandemic, Ramsdens said.
The pawnbroking loan book — showing the value of assets that Ramsdens is holding as collateral for customer loans — finished the fiscal year at a record high. It has continued growing since then, with a balance of £9.1 million at the end of December, the company said. The shares rose as much as 6.2% to the highest since June.
“We predict that increased energy bills, high inflation and higher interest rates will squeeze household incomes in FY23 leading to an increased demand for consumer borrowing,” chief executive officer Peter Kenyon said in the statement. “If consumers have assets to pledge, pawnbroking can provide a short-term solution and therefore our loan book is expected to increase” this year.
Pawnbroking, as well as financing alternatives like buy-now, pay-later services, are seeing increasing demand as the UK struggles with the highest inflation in decades, while rising interest rates are also pressuring household budgets.
The loans offered by Ramsdens allow customers to pledge watches and jewelery in exchange for a six-month loan. After that, they can repay the loan plus interest — or Ramsdens sells the pledged item if they are unable to pay.
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