Provident sees rising demand for Vanquis bank credit card

Bradford-based Provident said the number of people taking out a Vanquis credit card jumped 22 per cent as card transactions increasingly take the place of cash in everyday life.

Provident’s chief executive Peter Crook said: “You need a credit card to shop online and when you travel anywhere. We allow inclusion for people who are not being served by the banks.

“People are using Vanquis to improve their credit history and 80 per cent of our customers have seen an improvement in their credit rating. Growth is being driven by strong demand from customers. We’ve built a very good business.

“We’re one of the few people willing to look at customers that other high street banks have turned away.”

Profits at Vanquis jumped almost 60 per cent to £113.7m, helping to offset a 17 per cent fall in profits at its traditional doorstep collection business to £102.5m.

The doorstep business was hit by a reduction in customer numbers amid difficult trading conditions.

The division said that demand for credit remains weak due to very low customer confidence and the persistent pressure on household incomes from rising food, fuel and utility bills.

In addition, significantly tighter credit standards are now being applied which is reducing the number of new customers into the business.

As a result, customer numbers fell by 17.3 per cent.

Bad debts also rose. Mr Crook said this was due to customers not wishing to take further credit having little incentive to bring their accounts up to date and so they remain in mild arrears. However, the group has seen an improvement in 2014.

“We’ve seen a good start to the year with collections,” said Mr Crook.

“We’ve changed the agenda. Customer circumstances aren’t any better, but we’re now leaner and cleaner and better quality. We’ve tightened the underwriting.”

Provident said the development and roll-out of smartphone and tablet apps are on track and should be completed in 2014.

The group axed 520 jobs last year, some 17 per cent of the workforce, which will lead to savings of £26m in 2014.

Mr Crook said there are no plans for any more cuts. He said there will be another 60 or 70 jobs created at Vanquis as the bank takes on more business. Vanquis currently employs 320 people.

In a bid to turn around its doorstep lending business, Provident is broadening its customer base and the products it sells through the roll-out of Satsuma, a new online credit service designed to take on payday loan companies like Wonga. Satsuma Loans lends sums of up to £300 to customers.

Mr Crook said that early results following the launch of Satsuma are encouraging and confirm the potential of the business, which should start to make a profit next year.

The company reported a 10 per cent increase in 2013 pre-tax profits to £196m.

The group is paying a final dividend of 54p per share, up 11.6 per cent, making a total dividend for 2013 of 85p, up 10 per cent and in line with expectations.

Analyst Phil Dobbin, at Espirito Santo, said: “Provident reports a good start to the first two months of 2014 and in particular collections appear to be improving in the Consumer Credit Division while arrears fall and Vanquis has carried a strong finish to 2013 over into 2014.

“This appears to us to be a solid performance.”

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