7th May 2015 09:52
LONDON (Alliance News) - Provident Financial PLC Thursday said it is well-placed for growth in 2015, citing "sound credit quality" across its three divisions and a "strong start" to the year for its businesses.
"All group businesses have made a strong start to 2015. Collections performance in the important first quarter trading period has been strong and credit quality in all three divisions is very sound, providing the foundation for another year of good-quality growth in 2015," Chairman Manjit Wolstenholme said in a statement.
The update, which coincides with the company's annual meeting of shareholders, covered developments at the lender between the beginning of 2015 and May 6.
Vanquis Bank, a provider of credit cards to customers who may not be able to borrow from mainstream lenders, showed year-on-year customer growth of 18% and average receivables growth of approximately 25% in the UK, according to Provident Financial, which said the increases were achieved without compromising credit standards. The company said that levels of delinquency, which refer to borrowers who are having trouble in meeting repayments, were "favourable" throughout the first quarter.
Vanquis is running down a book of receivables in Poland, where it decided to withdraw a pilot operation, and said the process is progressing "satisfactorily".
Provident Financial said its consumer credit division's customer numbers fell by 20% to about 1 million year-on-year, while receivables ended the quarter 18% lower than March 2014, citing tighter lending standards in the home credit business.
The company said the home credit business is now a "leaner, better-quality business focused on returns" after 18 months of work. That meant the home credit business began 2015 with a "smaller but higher quality" customer base and receivables book, better margins and lower costs, according to the company. It expects to save about GBP10 million per year on a one-off cost of about the same amount due to redundancies in the home credit division.
The consumer credit division's online loans business, Satsuma, made "good" progress during the first quarter, according to Provident Financial, which said the unit's customers increased to 31,000 in the first quarter from 21,000 in December and its receivables book increased to GBP6.9 million from GBP5.0 million.
"Satsuma is on track to break even on a monthly basis by the end of the year," Provident said.
Glo, a pilot operation that lends bigger amounts over a longer period of time than Satsuma and the home credit division, is being tested to see if returns are satisfactory.
"Glo is showing encouraging progress and a formal decision on whether to proceed to full roll-out will be made during the third quarter of the year," Provident Financial said.
Meanwhile, Moneybarn, which provides secured car finance to non-standard customers in the UK, recorded "strong new business volumes" in the first quarter. Customer numbers increased by 2,000 to 23,000 during the first quarter, while receivables grew to GBP170 million from GBP151.7 million.
"A trial to test the appeal of the Moneybarn car finance proposition to Vanquis Bank customers is about to commence," the company said.
Provident Financial shares were down 1.9% at 2,953.00 pence on Thursday following the mid-morning announcement. The stock is up by about 19% so far in 2015.
By Samuel Agini; [email protected]; @samuelagini
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