A near-doubling of finance company Solvar’s funding costs during the December half has offset strong growth in lending and revenue, resulting in a small fall in earnings. The company has decided to go for growth, saying it is confident borrowers can manage their commitments. Solvar (formerly Money3) said funding costs increased as it drew down on a A$64.3 million mezzanine debt facility established last June. It said this will have an impact on current year earnings until funds are deployed into the loan book. “When fully deployed, it will result in a revenue benefit of around $12 million in 2023/24,” the company said. Solvar, which trades as Money3, Automotive Financial Services and Go Car Finance in New Zealand, is predominantly a vehicle finance company. Its loan book grew to $829.7 million in the December 2022 half – an increase of 20.1 per cent over the previous corresponding period. Revenue increased 13.5 per cent to $103.5 million. The bad debt expense of 14.5 million was up from $13.6 million in the previous corresponding period but within the target range of 3.5 per cent to 4.5 per cent. Finance costs increased from $11.1 million to $19.1 million. Profit for the half year fell 0.4 per cent to $25.7 million. Solvar has several finance facilities in Australia and New Zealand totalling $898.3 million, with $562.6 million drawn at December 31 – up from $425.5 million at June 30 last year. Solvar chief executive Scott Baldwin said: “I am pleased that the group has continued to grow, adding nearly $100 million to the loan book over the last half year. This growth will set the company up for strong revenue growth into the following financial year. “With an average outstanding balance of $11,500 per customer, we are confident consumers are well placed to manage their commitments over changing credit cycles.” Baldwin said the establishment of a warehouse facility in New Zealand will reduce funding costs.