Provident Financial (PFG) is trying to put its past mistakes behind it. Vanquis Bank has reached a settlement with the Financial Conduct Authority (FCA) over its sale of repayment option plans (ROP), where it failed to adequately disclose interest charges. The total cost of the settlement will be around £172m. To help fund this it has launched a rights issue, aimed at raising net proceeds of £300m. That will also boost its common equity tier one (CET1) ratio – which had fallen to 14.5 per cent after accounting for the settlement – back above its regulatory minimum.
As expected, the bottom line suffered from the tumultuous restructuring of the home credit operations. The business incurred a pre-exceptional loss of £114m, ending the year with a receivables book of £352m – down more than a third on 2016. However, customer collections have improved, standing at 78 per cent in December compared with 57 per cent four months earlier.
Elsewhere in CCD, Motor finance provider Moneybarn may have grown receivables more than a fifth, but impairments were up 90 per cent, representing almost 9 per cent of the year-end book. Vanquis Bank’s 15 per cent growth in its loan book only fed through to a 1 per cent increase in underlying pre-tax profit. That’s because its annualised risk-adjusted margin declined 2 percentage points to 30.2 per cent, while it was also without income from ROPs.
Analysts at Shore Capital expect adjusted pre-tax profits of £181m during the year to December 2018, giving EPS of 90.1p (2017: £109m, 62.5p).
| PROVIDENT FINANCIAL (PFG) | ||||
| ORD PRICE: | 995.6p | MARKET VALUE: | £1.48bn | |
| TOUCH: | 995.6-1,001p | 12-MONTH HIGH: | 3,284p | LOW: 427p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | 361p* | LEVERAGE: | 7.3 | |
| Year to 31 Dec | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 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 |
| 2017 | 1.20 | -123 | -90.7 | nil |
| % change | +1 | - | - | - |
| Ex-div: | na | |||
| Payment: | na | |||
| *Includes intangible assets of £151m, or 102p a share | ||||
