17th Dec 2007 07:01
Provident Financial PLC17 December 2007 PROVIDENT FINANCIAL PLC PRE-CLOSE BRIEFING 17 DECEMBER 2007 Provident Financial will today provide the following pre-close briefing toanalysts and investors. Commenting on the update, Peter Crook, Chief Executive of Provident Financialsaid: "The group is very well funded and able to take full advantage of current marketconditions at a time when an increasing number of consumers in the UK are havingdifficulty obtaining credit from high street lenders. Strong credit managementhas produced an improvement in the level of arrears. The group is trading welland is expected to report strong profits growth for the year as a whole, in linewith market expectations." Consumer credit Home credit The level of new customer applications to home credit has increased in thesecond half of 2007 as a result of the continued success in developing the newermarketing channels such as direct mail and the internet, assisted by morefavourable market conditions, as mainstream lenders tighten their lendingcriteria and retreat from the non-standard consumer credit market. In order to maintain the quality of the receivables book, home credit hascontinued to decline around one-third of customer applications. Nonetheless,the rate of customer growth has increased during the second half of 2007 and atthe end of November customer numbers were 3.8% up on the prior year. The enhanced credit management processes introduced over the last eighteenmonths, including the deployment of centralised credit scoring procedures forall new customer applications, have kept impairment levels under tight control.As a consequence of these improvements, home credit's charge for impairment grewat a lower rate than both revenue and receivables during the second half of2007. Overall, home credit remains on track to deliver full year profits in line withmarket expectations. Real Personal Finance The market test of this unsecured direct repayment loan product increased from 2to 20 locations during October, as planned. Early indications are that thelevels of new customer acquisition and collections performance are consistentwith internal projections. We anticipate being in a position to provide further details of progress withthe market test with our full year results announcement in March 2008. Vanquis Bank At the end of November, customer numbers at Vanquis Bank stood at in excess of310,000, up from 251,000 at the start of the year. Response rates from directmarketing campaigns and the level of internet applications have increased duringthe second half of the year and the business has benefitted from a number ofmainstream credit card providers pulling back from the non-standard market. Overall credit quality has improved further as a result of the continueddevelopment of underwriting and arrears management. Around 70% of customerapplications are being declined and the arrears profile of the book has improvedfurther. Accordingly, the favourable trend of impairment charges rising at asignificantly lower rate than revenues and receivables has continued through thesecond half of 2007. The business moved into profitability in June, and has continued to reportprofits in its management accounts in each of the subsequent five months. Wecontinue to expect that it will trade at around break even for the year as awhole. Funding The group's funding and liquidity positions remain strong, with minimum headroomagainst committed facilities in excess of £350m and a weighted average period tomaturity of 3.9 years. This is sufficient to fund the group's medium terminternal growth initiatives and, accordingly, the group is unaffected by thecurrent crisis in the global credit markets. Group Overall, the continuing group is trading well and is expected to report strongprofits growth for the year as a whole, in line with market expectations. Enquiries: Investor RelationsStuart Caldwell Provident Financial 01274 731111 MediaJohn Moulding Provident Financial 01274 731111Nigel Prideaux Brunswick 0207 404 5959 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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