Manx Financial Group plc (LON:MFX) Chief Executive Officer Douglas Grant caught up with DirectorsTalk to discuss 2025 results, deposit growth, DCA provisions, Payment Assist, the Irish consumer credit licence application, the Fiinu overdraft product and the outlook for 2026.
Q1: Results were out today, and I see your deposits grew by 12% over the year, and that’s despite operating in a challenging lending environment. How has Manx Financial managed to navigate all of that?
A1: We had good balance sheet growth, which is the first thing I would say. The net loan book grew by 10%, and also, we’ve got to fund that loan book growth, so we funded it by deposit raising, which grew by 12%.
You may well have read later on in the statements that our actual cost of funds had dropped during the year, despite the fact we were looking at garnering more deposits. The backbone behind that is we have two banking licences; we have one in the Isle of Man, which is a Class 1 banking licence, the same as HSBC, Barclays, etc, and we have a branch banking licence in the UK.
So, we look at the jurisdictions wherever it’s cheapest to raise deposits, we raise deposits and so we managed to not just raise deposits by a significant amount, but we also managed to reduce the actual overall cost of deposits within the book.
Q2: Now, over the period, the group had to factor in £1.3 million in DCA provisions relating to motor. Could you just give us a bit more detail around that? Are there going to be any more provisions in the future?
A2: I’m actually so pleased that the FCA finally managed to come up with a redress scheme, although it’s been challenged by four other people at the moment. That redress scheme, as far as I’m concerned, it takes the lack of clarity out of our results.
We were getting asked about this for so long, it’s great to actually put a number on it and say, that’s a UK redress scheme dealt with, put it to bed. So, the £1.3 million is in relation to commissions that have been paid between 2007 and 2024 in the UK.
To answer the second part of your question, this is the peak year. We don’t expect to be putting any more provisions in the accounts for this redress scheme.
Q3: Just turning to subsidiaries. Payment Assist’s advances grew by 29%. What were the main drivers to that performance?
A3: The key for us was Payment Assist, which is in the buy now, pay later sector, and it’s probably the UK’s largest in that sector in the automotive industry. It’s to actually have a product which customers want, and there’s no doubt everybody understands that these are incredibly challenging times.
Disposable income levels are reducing whether or not you’re an SME or an individual so to have a product in that sector which people need; your car needs to be serviced, you need tyres on your car, you need to pay for them.
By way of example, Payment Assist has a three and a four-month product, so you put your car in, four wheels cost £1,000, you pay £250 that day, then over the next three months you pay £250, £250, £250. So, the customer’s getting a great deal, it’s an interest-free deal and so from a Consumer Duty, FCA and a customer perspective, that’s the kind of product they like.
From the garage’s perspective, they give us a yield, because we pay them the money upfront. So, the garage gets its money upfront, and the credit risk is lying exactly where the credit risk should lie. It should lie with me, the funder.
So, Payment Assist has got the right products for the right challenges in this environment at this point in time. It was an exceptional growth of 29%, it was very, very good but it’s product driven.
Q4: Just related to Payment Assist, could you update us on the progress of your Irish consumer credit application?
A4: The group put its consumer credit licence for the Republic of Ireland, in last week so it’s bang on schedule. We are expecting to hear back from the Central Bank of Ireland in the summer and with a fair wind, we’ll have that licence up and running before the end of the year.
Q5: Now, the Fiinu overdraft product, that’s due to launch this quarter, what can we expect the effect to be on the group?
A5: Well, the Fiinu product is a short-term overdraft product. So, it fits into that suite of products where I believe is really customer focused at the moment in that short-term lending. It’s going to be a mobile app-based product.
I’m very keen that we launch it, when it’s 100% right, as you would imagine so whether it’s in Q2 or Q3. My current expectation, it will be in the summer 2026 that we’ll have this product launched.
What it’ll do for the business, it’s a financially focused product. I’m using financial in a slightly different term so I should maybe expand on that. What I mean here is when we grew that deposit by 12%, the underlying deposit that the customers were looking for was a one-year deposit. They’re looking for the one-year deposit because they’re basically saying, what interest rates are going to rise, why lock myself in for the three-year product, then I can get a higher return in one year/two years’ time.
If we can use that one-year product and the overdraft product and the buy now, pay later product Payment Assist are very similar, the four-month products, I can use that one-year deposit three times. That becomes an incredibly positive product from a net interest margin perspective. In the year we grew interest margin by 14% so that’s a financially efficient product to use. It’s customer focused, it’s short term, it’s exactly where we want to be.
What we find in these times of economic uncertainty is big banks do what big banks have always done, is they close in, they stop offering credit. They do it quite subtly; they take overdrafts from businesses, overdrafts from people, for example.
This gives us an opportunity to get counterparties we would not normally see in the credit card. So, the Fiinu product is added to that suite of short-term products that we are very keen on in the current position of the economic cycle.
Q6: Just looking forward, how do you see the outlook for Manx Financial Group in 2026?
A6: I see 2026, 2027 and possibly even 2028 with the uncertainty that’s in the world. If the war was to end today, the bank is still saying inflation could hit 6%, it could be three interest rate rises in 2026. With that level of uncertainty, people are going to start protecting the cash flow so they will start looking at taking advantage of short-term lending products to get them over unexpected bumps in the road. We’ve got to make sure that we continue to supply those products.
We’ve mentioned buy now, pay later, we’ve mentioned the overdraft product, I’d add to that premium finance so if you’ve got a bundle of insurances, you could bundle them, we could put them together.
Payment Assist has over 8,000 garages on its roster and those 8,000 garages need employee insurance, employer liability insurance, contents insurance, building insurance, vehicle insurance, shareholder insurance. If we as a business can wrap all that up and we’ve got the licences to do that in the UK, we can go to these businesses and say that we’ll take that admin away from you and we won’t just get you a good price for it. We’ll actually allow you to pay over 10 months so we’re not taking the lump of your working capital which during these uncertain times you want to protect. You can actually spread the payments over the period of time.
That’s another example where we see in the current economic environment some positive areas for us to lend.
So, I see 2026 and 2027 as being challenging years but we have the right products to cope with those years, and we’ve also proven that we can grow both sides of the balance sheet whether it’s the lending side or the deposit side during these challenging times.
