Doorstep lender steps up growth


Provident Financial said it has seen a pick-up in lending levels

Doorstep credit group Provident Financial said it was on track for a good year after seeing a pick-up in lending levels.

The Bradford-based group said the improved trends in its home credit division reported in October had continued, with sales in the 12 weeks since the beginning of September up by around 7% on the same period in the previous year.

It added that it was focused on lending to existing, good quality customers, using tight credit standards which have been in place for some time, and this helped repayments remain stable.

Vanquis Bank, its sub-prime lending arm, has also continued to see strong levels of new business, with arrears continuing to fall.

Peter Crook, chief executive, said: “I am pleased to report continuing favourable trends in both businesses which reinforce management’s confidence of delivering a good result for the year.”

The group, whose home credit business offers small, short-term loans to people who would have trouble borrowing from mainstream lenders, also restated its belief that government spending cuts would have only a “modest” impact on its customers, less than half of whom received any benefits, other than child benefit or the state pension.

It added that the Government’s published timetable for benefit reforms enabled its agents to plan how the changes may affect customers during the coming four years, helping them to factor in the cuts when assessing potential borrowers.

In the long term, the business should also benefit from the transition to a Universal Credit benefits system from 2017, which should lead to 2.5 million households being better off, while at least a third of the group’s customers will benefit from an increase to the income tax threshold from next April.

The group currently turns down around 75% of people who apply to it for a loan, in favour of customers whose lifestyles are seen to be more stable.

Provident said it had a strong balance sheet, with Vanquis now generating enough capital to fund its own growth. It added that Vanquis remained on track to have outstanding borrowing of £450 million by 2012, while maintaining a 30% return on its lending.

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