Provident Financial's prudent approach to new lending has again paid off, with the consumer credit division holding profits steady at £127.5m and its credit card unit, Vanquis Bank, delivering solid growth.
On the home credit side, lending was concentrated on the existing customer base, which resulted in a 1.9 per cent decline in customer numbers to 1.83m. But a focus on its well-known existing customers saw a reduction in the impairment to revenue ratio from 32.9 per cent to 32.1 per cent. Vanquis, meanwhile, pushed profits up from £26.7m to £44.2m and saw customer numbers rise 27 per cent to 691,000 – impairments here, as a percentage of revenue, fell from 39.4 per cent to 36 per cent. Crucially, the business generated £14.8m more than the capital needed to fund growth and maintain regulatory capital requirements.
Moreover, the group's financial position has been strengthened by the retail deposit plan at Vanquis, which attracted £140m – it's on target to achieve 80 per cent of funding from deposits by the year-end. Moreover, a new £382.5m bank facility has been secured which, together with retail deposits, will provide sufficient funding through to May 2015.
Numis Securities expects pre-tax profit of £170.9m for 2012, giving EPS of 95.6p.
| PROVIDENT FINANCIAL (PFG) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,149p | MARKET VALUE: | £1.58bn | |
| TOUCH: | 1,148-1,150p | 12-MONTH HIGH: | 1,159p | LOW: 909p |
| DIVIDEND YIELD: | 6.0% | PE RATIO: | 13 | |
| NET ASSET VALUE: | 238p | |||
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2007 | 669 | 115 | 40.9 | 63.5 |
| 2008 | 751 | 129 | 70.9 | 63.5 |
| 2009 | 816 | 126 | 67.5 | 63.5 |
| 2010 | 866 | 142 | 76.7 | 63.5 |
| 2011 | 911 | 162 | 89.6 | 69.0 |
| % change | +5 | +14 | +17 | +9 |
Ex-div: 16 May Payment: 21 Jun | ||||
