4th Nov 2020 09:07
(Alliance News) - Provident Financial PLC on Wednesday said it is on course to meet 2020 market expectations after trading in line with plans during the third quarter.
Shares in Provident were up 2.4% at 239.00 pence in London in morning trading.
Chief Executive Malcom Le May said: "The group continued to trade in-line with internal plans during the third quarter and remains on-track to meet market expectations for 2020."
Le May took a leave of absence in September for a planned heart procedure and has now returned as planned.
The FTSE 250-listed doorstep lender said its balance sheet position was "robust at the end of September, noting that regulatory capital of around GBP700 million equated to headroom approximately GBP200 million above minimum regulatory requirements and a CET1 ratio of around 36%.
As at September 30, Provident's total liquidity amounted to approximately GBP1.1 billion. It had headroom on committed facilities at the group of about GBP180 million and about GBP700 million at its Vanquis Bank business.
Vanquis Bank delinquency trends in the quarter were stable and payment holiday take-up kept falling to below 1% of customers by September end. Customer booking volumes for the third quarter were, as expected, lower year-on-year in line with tighter underwriting standards enacted earlier in 2020.
Vanquis Bank customer spend was up around 31% quarter-on-quarter but was still down by approximately 15% year-on-year. This was in line with credit card market trends, Provident said.
Provident's Moneybarn business continued to see a strong demand level for used vehicles across its markets and new business volumes, up significantly from the prior quarter. Payment holiday take-up at September end was around 1.5% with a steep drop in take-up trend.
In Home Credit's collection performance has aligned with pre-Covid levels with over 80% of collections now taking place though remote methods.
Home Credit lending to existing customers was over 705 of normalised third quarter levels with new customer lending at around 60% of normalised levels, reflecting tighter lending criteria.
"The consultation to reduce headcount within the home credit business is complete and will result in annualised cost savings of [circa] GBP13 million with exceptional costs to achieve of c.GBP2 million in 2020. As seen across the sector, home credit experienced an anticipated increase in customer complaints during the period, which are expected to remain within 2020 forecast levels," said Provident.
On the subject of regulation, Provident said: "The group continues to adapt to a changing regulatory environment. Vanquis Bank has responded to the Financial Conduct Authority's (FCA) paper on persistent debt and Moneybarn is working towards appropriate customer outcomes following FCA guidance post-Covid-19. CCD is working with all stakeholders following the FCA's review of relending practices in the high-cost credit market and following heightened customer complaints activity, in common with the sub-prime sector. The group will continue to engage with its customers, and provide support where necessary, following the recently announced six month extension to payment holidays by the FCA."
By Anna Farley; [email protected]
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