Vanquis Bank helps drive Provident Financial profits ahead

PROVIDENT Financial today said the performance of its Vanquis Bank operation had helped it increase profits in the first half of its year.

The Bradford-based home credit business said that Vanquis, which lends to people turned down for credit by other banks, had increased pre-tax profits by 70% and customer numbers by 29%.

However the group said its consumer credit division (CCD) was experiencing “challenging” markets with rising living costs putting pressure on household incomes and putting people off borrowing.

Chief executive Peter Crook said that Provident had already acted to cut costs in the CCD which would benefit the second half of its trading year.

Provident saw first half pre-tax profits before exceptional restructuring cost up 7% to £76.5m in the six months to June 30 and has raised its interim dividend 7.6% to 31p.

The group said it has a strong funding and capital position and is fully funded into 2016.
 
Mr Crook commented: “Vanquis Bank has produced another excellent performance with first half UK profits up over 70%. The business continues to generate strong customer growth and margins through developing the under-served non-standard credit card market whilst continuing to apply tight credit standards.
 
“CCD is experiencing weaker demand from the home credit customer base, with the persistent rise in day-to-day living costs putting pressure on household disposable incomes and reducing confidence. In view of lower activity levels, action has already been taken to reduce the cost base which will benefit the financial performance of the business in the second half and beyond.
 
“The group overall has performed in line with its internal plan in the first half of 2013 and expects to do so for the year as a whole,” he added.