Customers cautious over credit – Provident

LENDER Provident Financial is on course for “good quality growth” throughout 2012 but said that consumer credit had been subdued because of rising household bills.

Chairman John van Kuffeler told shareholders at the Bradford-based company’s annual general meeting that credit quality in its operations had been positive over the first four months of the year.

Mr van Kuffeler said: “The group has started 2012 well. Credit quality in both businesses remains good and the Home Credit business has delivered a sound collections performance through the first four months of the year.

“Delinquency levels at Vanquis Bank remain at record lows and the business continues to generate strong growth and margins. The group is on track to deliver good quality growth for 2012.

“The group’s funding position is extremely robust, allowing the group to execute in full on its growth plans into 2015.”

He said conditions for consumer credit remained challenging as disposable incomes continue to be affected by food, fuel and utility price inflation.

“In particular, the higher winter utility bills during the first quarter of the year have stretched household budgets resulting in relatively cautious customer and agent behaviour which is moderating the demand for credit.”

The group’s Vanquis Bank credit card operation had continued to experience “strong demand” because its customers are more likely to have regular employment.

The operation has also launched a credit card product in Poland. The pilot is likely to run for a year and cost approximately £3m in 2012.
 
Mr Kuffeler added: “The group’s funding has been further strengthened during the first quarter of the year and is extremely robust, allowing the group to meet its contractual debt maturities and execute in full on its growth plans into 2015.”