Provident reports a strong start to 2016

Provident said its door step credit business performed well through the first quarter of the year.

The Bradford-based group, which was recently promoted to the FTSE 100, said all its businesses are trading in line with, or above, internal plans and it has seen sound credit quality across all three divisions.

Its Vanquis credit card business reported year-on-year average receivables growth of 13 per cent in the four months to May 4 and profit growth was modestly ahead of 13 per cent, supported by robust margins, operational gearing and lower funding costs.

Provident said Vanquis Bank's internet bookings were strong whilst first quarter year-on-year direct mail bookings were lower because the spend on the 2016 programme is more heavily weighted towards the second half of the year.

The face-to-face business also contributed lower volumes. As a result, total account bookings were 23,000 lower than the first quarter of 2015 and the year-on-year growth in customer numbers at the end of March was 6.2 per cent versus growth of 9.9 per cent for 2015 as a whole.

Provident said delinquency levels have remained favourable through the first quarter of 2016. It said this reflected the sound quality of the receivables book and the stable UK employment market.

The company said its home collection division performed well through the first quarter of the year with strong margins and lower costs more than offsetting the impact of lower year-on-year receivables.

The group said demand and customer confidence have continued to improve gradually and the focus on serving good quality, existing customers has resulted in a modest year-on-year improvement in sales during the first quarter of the year. As a result, receivables ended the first quarter 5 per cent lower than March 2015, narrowing the 10 per cent year-on-year reduction reported at December 2015.

Customer numbers ended the first quarter at 850,000, some 5 per cent lower than the start of the year which is consistent with the expected seasonal reduction.

Provident said collections performance during the important first quarter trading period was robust.

Provident's CEO Peter Crook said: "Credit quality is excellent and the business is well positioned to achieve its objective of at least maintaining profits for the year as a whole."

Satsuma, which was designed to take on the pay day lenders by offering lower interest rates, benefited from the significant tightening of credit standards implemented last year.

"The business is now generating a strong flow of further lending to established, good quality customers," said Mr Crook.

He added that a number of product development initiatives are on track to be delivered in 2016, including the launch of a mobile app and a monthly product.