15th Jan 2020 08:11
(Alliance News) - Provident Financial PLC on Wednesday said it is forecasting a 2019 profit in line with expectations and has obtained a new loan to fund its Moneybarn business.
According to Provident, market consensus is for pretax profit before amortisation of acquisition intangibles and exceptional items of GBP162 million, with a range of GBP155 million to GBP166 million, based on forecasts from 12 equity research analysts.
The doorstep lender said its 2019 fourth-quarter results aligned with the firm's internal plans, with its Vanquis Bank sub-prime credit card business results modestly exceeding expectations as a result of "favourable delinquency and tight cost control".
However, while Moneybarn, its sub-prime auto loans business, did produce "attractive receivables growth" in the fourth quarter, it "performed modestly below internal plan" as a consequence of higher impairment. Provident attributed the higher impairment to Moneybarn having achieved higher than forecast growth in 2019.
To support Moneybarn business flows, Provident has agreed a bilateral securitisation facility with NatWest Markets. The facility's initial funding will be GBP100 million, but this is expected to increase to GBP275 million over the next 18 months.
The new facility has a comparable funding rate to Provident's previous revolving credit facility which, in July, was cut to GBP235 million from GBP450 million.
Chief Executive Malcolm Le May said: "I am very pleased that the group has continued to perform well in the final quarter and we expect to report full-year results in line with market expectations.
"I am also delighted to announce that we have now agreed a bilateral securitisation facility to fund Moneybarn's business flows, further diversifying our funding sources, reducing the group's funding costs and supporting the group's medium-term growth ambitions."
The stock was up 0.9% in London early Wednesday at 425.50 pence.
By Anna Farley; [email protected]
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