Provident caution hits shares

27th Jul 2010 16:13

Flat interim profits and a cautious outlook for the rest of the year sent shares in doorstep lender Provident Financial lower.Profits in the half-year to June rose to £54m from £53.1m, on sales of £1.03bn up from £992m.The increase was solely down to a much improved contribution from Vanquis Bank, where profits jumped by 82% to £9.1m. New customers grew by 16%.Vanquis' progress outweighed a more difficult time for the core home credit business, where profits fell to £49.3m from £52m even though customer numbers rose by 5%.Cautious customer behaviour and tight underwriting is holding the core back, Provident said, though credit quality of its receivables book remains good."As anticipated, notwithstanding the 5% growth in customer numbers, demand for home credit continues to reflect cautious behaviour from some customers in the context of an employment market which is unlikely to change in the near future," chief executive Peter Crook said."The group is also mindful of the potential for unemployment to increase as a result of the government's fiscal austerity programme. Accordingly, the strong focus on asset quality and careful management of margins and costs is proving to be the right approach," he added.The interim dividend maintained at 25.4p.