Provident Financial grew profits strongly at the halfway stage - helped by a 60.2 per cent rise in earnings from the Vanquis Bank credit card division. The shares rose 10 per cent on the back of these figures, and are up 36 per cent this year - yet the share price rating still doesn't do justice to the growth profile.
Credit demand rose sharply as mainstream lenders continued to pull up the drawbridge on new lending, and Provident saw group customer numbers rise 5.5 per cent at 2.6m, with average receivables 10.6 per cent higher at £1.27bn. Much of this came from the credit card side, where customer numbers grew 27.4 per cent to 777,000 and receivables rose 38 per cent to £525.1m. Moreover, none of this was achieved by compromising divisional margins which, on an annualised risk-adjusted basis, rose from 34.7 per cent to 34.9 per cent.
Trading on the consumer credit side was more subdued, but profits were little changed at £50.4m, reflecting a continued emphasis on maintaining strict lending criteria and a focus on existing customers. Consequently, receivables were flat and customer numbers here edged down 1.8 per cent.
Numis Securities expects full-year pre-tax profit of £182m, giving EPS of 102.9p (from £162.1m and 89.6p in 2011).
| PROVIDENT FINANCIAL (PFG) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,270p | MARKET VALUE: | £1.75bn | |
| TOUCH: | 1,270-1,273p | 12-MONTH HIGH: | 1,251p | LOW: 908p |
| DIVIDEND YIELD: | 5.6% | PE RATIO: | 13 | |
| NET ASSET VALUE: | 241p | |||
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 450 | 62.3 | 34.3 | 26.7 |
| 2012 | 480 | 72.9 | 41.1 | 28.8 |
| % change | +7 | +17 | +20 | +8 |
Ex-div: 31 Oct Payment: 30 Nov | ||||
