Middle-class savers pile in to Provident

A SURGE in demand from cash-strapped householders and a boost from middleclass savers helped doorstep lender Provident Financial post a 12.2pc increase in profits last year to £161.1m.

Shares in the Bradford-based firm, which lends to cash-strapped households refused credit by mainstream lenders, soared 67p to 1,140p, as it revealed a 27pc increase in credit card customers last year to 700,000.

Founded in 1880, Provident Financial offers loans from £50 to £500 with interest rates of 500pc or more. It also offers a high-interest credit card, via its Vanquis Bank operation.

About one in 20 households receive a weekly visit from one of the lender’s army of 10,500 doorstep salesmen, either to issue loans or collect repayments.

Profits at the bank were up 65.5pc to £44.2m but profits in the Consumer Credit division – which issues the loans – were flat at £127.5m, up from £127.3m in 2010.

Chief executive Peter Crook said it was having to be stricter about who it lends to as households struggle with rising bills.

Although the company targets lowincome households, it received a major boost from Middle England. Crook revealed the bank had raised about £200m in its savings accounts since they were launched last year, with the typical saver aged over 50, hailing from the Home Counties and depositing an average of £35,000. The lender also boasted of ‘strong collections’ performance as its strategy of hiking commission payments for staff paid off.

Sub-prime lenders – including those offering ‘payday loans’ – have prospered as mainstream lenders have tightened their criteria in the wake of the credit crisis.

Provident Financial posted a final dividend of 42.3p, making a total dividend for the year of 69p.