8th May 2008 12:06
Provident Financial PLC08 May 2008 Provident Financial plc Interim Management Statement 8 May 2008 Provident Financial plc, the leading UK non-standard lender, made the followingInterim Management Statement at its Annual General Meeting held at noon (BST)today. Commenting on the company's performance for the year to date, its Chairman Johnvan Kuffeler said, "We are delighted with the strong start to 2008. Market conditions remainfavourable for Provident Financial and the company's funding position is strong.At the same time, management is exercising a sensible degree of caution inorder to deliver further high-quality growth in 2008 against the backdrop of anuncertain macroeconomic outlook." Market conditions Conditions in the UK non-standard lending market continue to be favourable forProvident Financial. Mainstream and near-prime lenders have continued totighten their credit granting criteria, thereby restricting the supply of creditto non-standard consumers. These conditions, together with the effectiveness ofthe group's marketing strategies, are resulting in an increased flow ofapplications for the credit products offered by Provident Financial. The weekly call on customers allows the impact of changes in the economicenvironment to be identified rapidly and lending decisions adjusted immediately.Lending decisions continue to reflect the pressure on changes in customers'disposable incomes from rising food, fuel and utility bills which have beenpresent for two years as well as the outlook for unemployment and, as a result,the group's customer base shows no deterioration in credit quality. Business performance Our core Consumer Credit Division has made a strong start to 2008, with customernumbers increasing by 6.3% over the twelve months to the end of March. Thefirst quarter of the year is the most important period for collections, so it ispleasing to see that impairment levels have remained stable since the year-end. The roll-out of the new core accounting and processing system, known as Focus,is progressing to plan and is currently implemented across over 40% of thebranch network. Focus will provide the platform for a series of businessimprovement initiatives, including the new commission scheme for agents which,after successful field trials, has recently been approved for national roll-out.The new commission scheme is expected to provide further improvements to bothcollections and agent retention levels and has been received positively by bothagents and field management. The market test of Real Personal Finance continues to perform well, with aroundtwo-thirds of customers having had a previous relationship with the home creditbusiness. Early business metrics, including credit quality, are encouraging.As planned, Real Personal Finance will be expanded to around 50 locations in thenext month, with a decision on the pace and scale of a national roll-out to betaken during the third quarter of the year. Vanquis Bank is experiencing an increasingly strong flow of applications fromboth the internet and direct mail channels. Customer numbers stood at 345,000at the end of March, up from 316,000 since the year end and showing year-on-yeargrowth of 30%. Nonetheless, Vanquis Bank is adopting a cautious approach toaccepting new business. Underwriting has been tightened on three occasions inthe last nine months and over 70% of card applications are being declined.Impairment levels are very stable and are consistent with the medium termtargets for the business. Successful partnerships are being developed with several mainstream cardissuers, whose declined internet applications are offered a link to VanquisBank's own website. There are also active discussions taking place with anumber of other major card issuers to explore similar arrangements. Initialresults suggest that these relationships will become an important source ofprofitable new business. Vanquis Bank has recently secured new premises for its call centre in Chatham,which will provide the capability to serve up to 750,000 accounts when fullystaffed. At the same time, it is taking the opportunity to upgrade its ITcapability to accommodate future growth. These infrastructure changes will becompleted by late summer. Funding & capital The group remains strongly funded with around £80m of excess capital and over£400m of undrawn facilities and is therefore able to execute in full itsinternal plans, as well as being able to capitalise on current favourable marketconditions. Outlook The strong start to the year and continuing favourable market conditions,coupled with the company's strong funding position and management's closeattention to the quality of new business being written, should secure thedelivery of high-quality profits growth in 2008. The company will announce its 2008 interim results on 30 July 2008. Enquiries: MediaDavid Stevenson, Provident Financial 01274 731111Nigel Prideaux, Brunswick 020 7404 5959 Investor RelationsStuart Caldwell, Provident Financial 01274 731111 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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