Provident seeing weak demand

The Bradford-based group said that household incomes remain under pressure from unemployment and, more importantly, under-employment as a result of restrictions on working hours and wage rates.

But the group reported a "sound collections performance" through the first four months of the year after it tightened its lending criteria.

The group, which specialises in loans to people who typically borrow under 500 and pay it back in weekly collected instalments, said it was encouraging to report that April had seen a lift in the volume of credit issued.

Chairman John van Kuffeler said: "Management's strong control of asset quality and careful attention to margins and costs is proving to be the correct approach in the context of an employment market that is unlikely to improve materially this year."

Provident's chief executive Peter Crook added that the severe snows that hit collections at the start of the year would not have a lasting effect.

In the consumer credit division new customer growth stayed at around five per cent during the first quarter of 2010.

The group's Vanquis Bank operation saw strong growth in the volume of card applications, but the group has stuck to its acceptance rate of 17 per cent. The Bank had 454,000 customers at the end of March, up from 426,000 at the start of the year.

The group said Vanquis is generating growth and returns consistent with achieving its target of a 30 per cent post-tax return on equity by the end of this year.

The group added that its balance sheet and liquidity are strong and plans to deliver good quality growth in 2010 are on track. Provident's shares have fallen 7.8 per cent in the year to date, underperforming the FTSE All Share Index by 8.8 per cent. Last night they closed down 0.4 per cent, a fall of 3.5p to 852p.

Earlier this year Mr Crook said people are being sensible and are unwilling to take on new credit commitments.

The group posted 2009 profits at the lower end of market expectations.

Activity at the group's consumer credit unit was hit in the peak pre-Christmas period by heavy snow as well as caution from customers.

The group is keeping a tight control over costs and as announced in February, 90 staff in Bradford in the home credit division have left the business.