Blackfriar: Safe but steady policy will pay off for the big credit lenders

Analysts are worried that the two Yorkshire-based lenders are having a tough time with no clear vision of when the market will pick up.

On Tuesday Provident warned that conditions look set to remain tough in 2010 as customers worry about losing their jobs or working reduced hours.

The group specialises in loans to people who usually need to borrow less than 500 and pay it back in weekly instalments.

But International Personal Finance said yesterday that the worst is behind it and it expects to see strong growth in customers this year.

The group said it was disappointed that profits fell 19 per cent in 2009, but given the significant impact of the recession it was pleased with the recovery seen since the fourth quarter of 2009.

Spun out of the same company – Bradford-based Provident Financial – three years ago, both now rank in Yorkshire's top 10 companies.

Both have long-term stable management and deserve a little credit for continuing to make a profit in one of the worst years the industry has ever seen.

Leeds-based International Personal Finance saw profits slip 19 per cent to 61.7m from a record in 2008, which is a credible performance at a time when many of the Eastern European banks have had to be bailed out by their Governments. Likewise Provident has reined in costs and managed to make a tidy 130m profit in 2009 – down just one per cent on the previous year.

At a time when Batley-based rival Cattles is suffering a slow and painful death, the management at Provident and International Personal Finance shouldn't be knocked.

Both companies decided to stick to their knitting – door to door credit lending – at a time when Cattles branched out into bigger direct debt loans

But Cattles fell prey to a growing tide of bad debts in 2009, which had been hidden for years and regulators are now probing the company to determine where the accounting shambles started and why it was allowed to continue for so long.

It's a very different story at Provident and International Personal Finance.

Ok, they both saw reduced profits in 2009 but both are confident they can bounce back over the next few years.

Now that the recent heavy snows are out of the way, both firms should claw back some of the money they lost when agents were unable to visit customers at home.

Last night shares in International Personal Finance stood at 198.6p, down 4.6 per cent, and Provident's share price fell another 5.5 per cent to 869p.

Both companies are keeping their heads down and focusing on safe but steady lending in a market that is seeing less and less competition as rivals fall by the wayside.

Blackfriar would be very surprised if both their share prices are not up significantly by the end of this year.

FEW would have picked an estate agency and surveying company as a winner from the recession.

But LSL Property Services' 2009 performance, returning to profitability and resuming dividend payments, was in stark contrast to the turbulent housing market.

Now, months after buying 218 Halifax estate agency branches from Lloyds for 1, the York company is about to go on the acquisition trail again.

Blackfriar hopes LSL's not biting off more than it can chew, but he suspects not.

With nine per cent of the company's shares, chief executive Simon Embley won't risk it unless it's got significant potential.

And Embley, who made 3m buying LSL shares at their trough in 2008, knows a good deal when he sees one.