Growth at Vanquis boosts Provident Financial

It had benefited from strong growth at Vanquis Bank, its online and internet division, which gives credit cards to those turned down by mainstream banks.

The company, whose roots date back to 1880, reported a pre-tax profit of £72.9m ($113.1m) for the six months to the end of June, up from £62.3m the year before. Pre-tax profit at Vanquis Bank grew by 60 percent to £28.2m.

Provident said that in the last 18 months it had focused on issuing credit to good-quality existing customers given the continuing pressure on household incomes from the rising cost of food, fuel and utility bills.

“The consistently cautious approach to extending credit in both businesses has reinforced credit quality and provides a sound basis for delivering good quality growth for 2012 as a whole,” said chief executive Peter Crook.

Provident said the number of customers that failed to pay up - delinquency levels - at Vanquis had remained stable at record lows for the business.

It added that it was mindful of the potential for unemployment in the current economic environment and said the tight underwriting and credit line increase criteria it has operated for the last two years would remain in place for the foreseeable future.

Many smaller, alternative loans companies have benefited from the decision by mainstream banks to tighten their lending criteria in the wake of the 2008 financial crisis, even though consumers still need loans for their day-to-day needs in the face of higher inflation and rising unemployment.