Provident Financial has published a trading update covering the three months to the end of September 2021.
The group said its trading performance during the third quarter of 2021 improved significantly as a result of the more favourable macroeconomic backdrop.
Malcolm Le May, the chief executive, commented: "The group's trading performance during the third quarter improved significantly as a result of more favourable macroeconomic conditions reducing the impact of IFRS 9 accounting combined with customer demand for credit returning to pre-pandemic levels.
"Subject to these improvements continuing on a similar trajectory until the end of the year, the board would consider declaring an ordinary dividend pay-out of approximately 30% of adjusted ongoing PBT1 in respect of FY'21.
"The group remains conservatively positioned for any changes to the UK unemployment rate which occur as a result of job support schemes closing at the end of September. The early indication from our analysis of customer data is that the end of furlough is likely to have a lower impact on unemployment than previously thought. As such, the board will review the group's coverage levels at the year end with a view to making provision releases, if appropriate, which will reflect the unwind of our macroeconomic provisions taken during the pandemic.
"Over the last 18 months, we have supported our customers throughout a difficult period whilst focusing on several important strategic initiatives. The board and I remain focused on establishing PFG as the specialist bank for the underserved operating in the mid-cost segment of the market, at present built on our three core products, and delivering growth and sustainable returns to our shareholders over the medium-term."
The statement added: "In the group's credit card and personal loans business, delinquency trends remain consistent with the experience seen year to date and the improvement in customer expenditure trends seen during the first six months of the year continued into the third quarter. Expenditure levels per customer increased by approximately 20% year-on-year at the end of September and by approximately 5% versus September 2019. As a result, the receivables book grew by approximately 5% during the third quarter.
"Shortly after the period end, and in keeping with the previously announced timeframe, Vanquis Bank launched its unsecured personal loans product to the open market. The roll out will be on a phased basis using distribution partners and affiliate channels."
The group's vehicle finance business continued to experience a buoyant second-hand vehicle market during the third quarter and arrears trends were favourable, the statement added.
It added: "Credit issued grew by approximately 3% year-on-year, but new business volumes were lower as Q3'20 benefitted significantly from Covid-19 related demand dynamics. Receivables at the period end were broadly flat versus the end of June and the business remains well placed for the full year.
"The planned closure of CCD (Consumer Credit Division) continued to progress in-line with expectations during the period. At the end of September, receivables had reduced significantly since the end of June and were approximately £14m. The previously announced anticipated closure costs of up to £100m remain on track."