A strong set of full-year numbers from Provident Financial (PFG) highlights its continued advance into the customer bases abandoned by mainstream lenders, which are unwilling to extend consumer credit as they once did. Adjusted profit growth of nearly 20 per cent was underpinned by the success of sub-prime credit-card provider Vanquis Bank, which boosted its earnings by roughly a third in 2014. The canning of a similar credit card pilot in Poland after the company failed to gain traction with customers was the only major piece of bad news.
The Provy's home credit arm also performed decently in the first full year of operation since it launched its online payday loans business, Satsuma. Partly as a result of the FCA's crack-down on door-step lending, management is trying to create a "smaller but leaner" business with tighter credit standards. That meant customer numbers fell 29 per cent, but operating costs, receivables and impairments also fell. The upshot was modest profit growth of 1.4 per cent.
Broker Numis Securities expects EPS to increase 18 per cent to 156p this year and by a further 9 per cent in 2016 to 170p.
| PROVIDENT FINANCIAL (PFG) | ||||
|---|---|---|---|---|
| ORD PRICE: | 2,671p | MARKET VALUE: | £3.9bn | |
| TOUCH: | 2,669-2,673p | 12-MONTH HIGH: | 2,719p | LOW: 1,820p |
| DIVIDEND YIELD: | 3.7% | PE RATIO: | 21 | |
| NET ASSET VALUE: | 419p | NET DEBT: | 220% | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2010 | 866 | 142 | 77 | 63.5 |
| 2011 | 911 | 162 | 90 | 69.0 |
| 2012 | 980 | 197 | 110 | 77.2 |
| 2013 | 1,078 | 182 | 104 | 85.0 |
| 2014 | 1,076 | 225 | 127 | 98.0 |
| % change | -0 | +24 | +21 | +15 |
Ex-div: 21 May Payment: 19 Jun | ||||
