25th Feb 2014 16:33
LONDON (Alliance News) - Subprime lender Provident Financial Tuesday said its pretax profit fell 6.0% in 2013, hit by restructuring charges and after last year's result was lifted by pension scheme gains, but profits excluding the charges rose on a 10% increase in its revenues that was driven by strong trading at its Vanquis Bank.
In a statement, Provident Financial said it made a GBP182.4 million pretax profit for 2013, compared with GBP194.0 million in 2012, as it booked GBP13.7 million in exceptional items for restructuring within its Consumer Credit Division. The 2012 figure, meanwhile, was buoyed by GBP15.6 million gain related to the firm's pension scheme.
After stripping out exceptional items, however, the FTSE 250 company's pretax profit rose by 10% to GBP196.1 million, driven by its 10% revenue growth to GBP1.08 billion. Costs rose by 16% to GBP786.0 million.
Trading was boosted by Vanquis Bank, which lends to people who want to improve their credit rating, as it reported a GBP106.1 million pretax profit against 2012's GBP68.0 million.
But Provident Financial said its Consumer Credit Division had been hurt by difficult trading conditions, held back by weak credit demand because of lower customer numbers, "very low home credit customer confidence" and "persistent pressure on household incomes" from inflation.
Chief Executive Peter Crook said Provident Financial has made a "good start" in the first two months of 2014, with Vanquis Bank continuing to trade strongly and the home credit business seeing a "consistent improvement".
"Vanquis Bank has produced another excellent performance with UK profits up 60%. Credit standards have remained tight and the business continues to generate strong customer growth and margins through developing the under-served non-standard credit card market," Crook said in a statement.
"Good progress is being made in repositioning the home credit business as a leaner, better-quality, more modern, high-returns business whilst the Satsuma online installment lending product has made an encouraging start following its launch in November 2013," Crook added.
Provident Financial increased its total annual dividend by 12% to 85.0 pence from 77.2 pence.
Shares were Tuesday quoted at 1,869.00 pence, up 6.00 pence.
By Samuel Agini; [email protected]; @samuelagini
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