Provident Financial (PFG) boss Peter Crook is bang on when he says subprime credit card business Vanquis Bank remains "the star of the show" at the alternative lender. Higher employment and an improved credit environment lifted customer numbers by 16 per cent in this division, and revenue by a fifth. This helped overall adjusted pre-tax profits - excluding the cost of the Moneybarn motor finance acquisition and the restructure of the group's home credit business - rise more than a third to £127m.
Nonetheless, some of the Provvy's other units are playing strong supporting roles. In home credit, the company focused on shorter-term, higher-yielding loans. That meant that although customer numbers fell, its revenue after impairments grew. The company reinvested around £8m-£9m in its online instalment loan business, Satsuma, which is expected to turn a profit in 2016.
Now part of a larger production, Moneybarn has been able to expand its horizons and lower its minimum loan to £4,000 from £5,000, with management expecting that to go lower still. New business volumes were 88 per cent higher year on year.
Brokerage Cenkos expects pre-tax profit of £288m for the full financial year, giving EPS of 160p, compared with £234m and 133p in 2014.
| PROVIDENT FINANCIAL (PFG) | ||||
|---|---|---|---|---|
| ORD PRICE: | 2,995p | MARKET VALUE: | £4.4bn | |
| TOUCH: | 2,993-2,998p | 12-MONTH HIGH: | 3,268p | LOW: 1,942p |
| DIVIDEND YIELD: | 3.4% | PE RATIO: | 22 | |
| NET ASSET VALUE: | 396p* | NET DEBT: | 232% | |
| Half-year to 30 June | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2014 | 534 | 90 | 51.8 | 34.1 |
| 2015 | 555 | 111 | 61.8 | 39.2 |
| % change | +4 | +23 | +19 | +15 |
Ex-div: 29 Oct Payment: 27 Nov *Includes intangible assets of £155.6m, or 106p a share | ||||
