Provident Financial eyes year of investment

CREDIT LENDER Provident Financial said 2017 will be a year of significant investment for the group and its Vanquis Bank credit card division is making very good progress.

Vanquis reported a sustained uplift in new customer volumes since the third quarter of 2016.

Bradford-based Provident said the transition of the home credit business to a new operating model is progressing in line with internal plans.

The group said Vanquis Bank has experienced a strong flow of new account bookings in the first quarter of 2017, benefiting from the initiatives put in place in the second half of 2016 to expand credit card distribution, together with the launch of the Chrome branded card to address the nearer prime segment of the non-standard market.

First quarter new account bookings of 122,000 rose 45 per cent versus the relatively weak first quarter of 2016.

As a result, Vanquis Bank delivered year-on-year customer and receivables growth of 12 per cent and 14 per cent respectively.

Vanquis said delinquency levels have remained stable during the first quarter of the year, compared with the improving trend experienced through the first nine months of 2016. Analyst Gary Greenwood at Shore Capital said: “Provident Financial’s first quarter trading update shows strong volumes in Vanquis and Moneybarn but with some profit headwinds caused by new business strain, increased investment and some disruption to collections as a result of the restructuring of Home Credit, as anticipated.

“Overall, trading is said to be consistent with the consensus established following the Capital Markets Day in April, which we understand is for full year adjusted pre-tax profit of £340m to £341m.”

Analyst Stuart Duncan at Peel Hunt added: “Each of the group’s divisions is performing as expected and the overall performance is consistent with market expectations.”