Provident Financial upbeat on outlook after strong year

25th Feb 2014 07:39

Lender Provident Financial posted healthy full year numbers and assured investors it has made a strong start to its new year, with its core credit card unit Vanquis continuing to trade strongly. Group profits before tax and exceptionals for its year to December rose 9.9% to £196m. UK pre-tax profits jumped 59.5% to £113.7m, reflecting strong growth and returns in the Vanquis unit. Adjusted earnings per share grew 11.6% to 112.0p. The final dividend has been increased by 11.6% to 54p, which together with the interim dividend, gives a total payout for the year of 85p, up 10.1% on last time. The group said its funding and liquidity positions remain strong, allowing it to meet contractual debt maturities and fund its internal growth plans through to the seasonal peak in 2017. Its core bank facility of £382.5m was renewed in January 2014 with lower all-in cost than the previous facility. Gearing over the 2013 year reduced to 3 times from 3.2 times thanks to strong capital generation. Across the group, Vanquis Bank continues to impress, delivering strong growth and financial returns over the year, with the UK-focused unit making "excellent progress" in building towards its medium-term target of 1.3 to 1.5m customers. Elsewhere, the group's pilot credit card operation in Poland continues to evolve. Having developed an effective set of credit tools, the focus of the pilot is shifting to the development, marketing and distribution of its revolving credit proposition. The group added that there is also "excellent momentum" behind its programme to reposition the home credit business. The programme will be substantially completed in 2014. The Satsuma online instalment credit offering, meanwhile, has made an "encouraging" start following its launch in November 2013. The capability is being built to support a more rapid development of the Satsuma business from late 2014. Provident believes Satsuma is well placed to steal market share from payday lenders, which face tighter regulation. It reckons Satsuma could become a top three player in the fast -growing online credit market within three to five years. The group, which serves over 2.6m customers, said it has made a good start in the first two months of 2014, with Vanquis continuing to motor ahead and the home credit business experiencing a consistent improvement in credit quality and collections performance.Provident Financial shares opened this morning at 1863p, valuing the company at £2.6bn. KP