17th Oct 2014 07:16
LONDON (Alliance News) - Provident Financial PLC Friday said it is well positioned to deliver good quality growth for the whole of its current financial year as its Vanquis Bank reported growth in customers and average receivables.
In a statement, Provident Financial said Vanquis Bank generated "strong growth and margins" in the UK through the third quarter of 2014, with year-on-year customer growth of 17% and average receivables growth of approximately 32%.
It said levels of delinquency, or customers unable to repay their debt, remained favourable through the third quarter, citing the quality of its receivables book and the improving employment market in the UK. This allowed Vanquis to report an annualised risk-adjusted margin above 33%, ahead of its minimum target of 30%.
According to Provident Financial, Vanquis's pilot credit card operation in Poland had 50,000 customers as of September, an increase from 37,000 in June, and a receivables book of GBP13.4 million, and increase from GBP9.3 million in June. It expects the rate of investment, which it said was consistent with that reported at the time of its interim results, to continue at a similar level through the remainder of the year.
Turning to its consumer credit division, Provident Financial said demand from existing home credit customers remains relatively subdued, as it claimed that customer confidence has "not yet shown any sign of improvement" despite the improvement in the wider UK economy.
"The tighter credit standards introduced as part of the repositioning of the home credit business in September last year have continued to curtail significantly the recruitment of more marginal customers into the business," Provident Financial said.
It said the result was that consumer credit division customer numbers and period-end receivables showed year-on-year reductions of approximately 25% and 19%. Nevertheless, the business has experienced a "marked improvement" in the quality of its receivables book, which Provident Financial put to tighter underwriting and the drive to implement standardised arrears and collections processes.
That resulted in the division's annualised ratio of impairment to revenue reducing to around 33% in September, an improvement from 35.2% in June and the 38.7% in December 2013. Provident Financial said this supported an increase in the division's annualised risk-adjusted margin to approximately 65% in September, up from 62.9% in June and 58.9% in December 2013.
Satsuma, the consumer credit division's online direct repayment loan product, boasted an improvement in customer numbers, which increased from 11,000 to 14,000 between June and September, while its receivables book grew from GBP2.4 million to GBP3.2 million.
Meanwhile, Moneybarn, the non-standard vehicle finance group Provident Financial acquired in August, has traded in line with internal plans, according to the company's statement.
"The management team is actively engaged in piloting extensions to the product proposition and work has also commenced to assess the potential opportunities for synergies with the group's other businesses. These include enhancements to underwriting and collections capabilities, the development of a business-to-consumer proposition and leveraging the Vanquis Bank customer base," Provident Financial said.
Provident Financial shares were trading up 0.7% at 2,008.00 pence early Friday.
By Samuel Agini; [email protected]; @samuelagini
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