Improving its IT allowed Provident Financial (PFG) to reduce its home credit workforce, and now the company is going one step further. Management has proposed replacing its self-employed agents with more than 2,500 full-time customer experience managers. Certain middle management roles are being replaced, and the collections and arrears parts of the business separated. Chief executive Peter Crook says the changes, currently under consultation, would reduce costs and improve efficiency.
Tighter credit standards meant customer numbers fell slightly for the home credit business and online short-term lender Satsuma during 2016, while revenue was fairly flat at £519m. However, a £12m reduction in start-up costs for Satsuma helped push up divisional return on assets slightly to 22.3 per cent. However, management decided to close the guarantor loans business, glo, after the timescale for obtaining regulatory approval for this division proved too long.
New business for credit card provider Vanquis Bank (which will, instead, seek approval for a new guarantor loans product) picked up after a weaker first half. However, new accounts bookings were still 27,000 lower last year at 406,000, which management attributed to declining face-to-face sales in its pop-up stands - intentionally curtailed, after delivering lower-quality customers.
Analysts at Shore Capital expect adjusted pre-tax profits of £366m during the 12 months to December 2017, giving EPS of 190p (from £334m and 176p in 2016).
PROVIDENT FINANCIAL (PFG) | ||||
|---|---|---|---|---|
| ORD PRICE: | 2,921p | MARKET VALUE: | £4.32bn | |
| TOUCH: | 2,920-2,922p | 12-MONTH HIGH: | 3,402p | LOW: 2,125p |
| DIVIDEND YIELD: | 4.6% | PE RATIO: | 16 | |
| NET ASSET VALUE: | 535p* | NET DEBT: | 207% | |
| Year to 31 Dec | Turnover (£bn) | Pre-tax profit (£m) | Earning per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 0.98 | 197 | 110 | 77.2 |
| 2013 | 1.08 | 182 | 104 | 85 |
| 2014 | 1.08 | 225 | 127 | 98 |
| 2015 | 1.11 | 274 | 152 | 120.1 |
| 2016 | 1.18 | 344 | 182 | 134.6 |
| % change | +6 | +26 | +20 | +12 |
Ex-div:18 May Payment:23 Jun *Includes intangible assets of £149m, or 101p a share | ||||
