Provident takes cautious approach to lending

Bradford-based Provident Financial, founded in 1880 to provide small cash loans to people on low incomes, said adjusted pre-tax profit rose 11.1 per cent last year to £144.5m, outstripping the rate of growth in lending.

Average customer receivables rose 4.4 per cent to £1.05bn.

“The first quarter is the peak collections period in the home credit business and it is encouraging to report sound collections and a continuation of year-on-year sales growth,” the company said.

“In view of the uncertainty over the future direction of the UK employment market, the tight underwriting standards which have been in place for a considerable period of time will continue to be applied in both businesses.”

Mark Williamson, an analyst for KBC Peel Hunt, said the results from the FTSE 250 listed lender had met his expectations.

“The new year has started well for the group with improved demand seen in the final quarter continuing into the new year, delinquencies are stable and the group is benefiting from improved yields,” he wrote in a research note.

“The stock remains a ‘buy’ although some short term consolidation in the share price looks likely.”

The company said more favourable conditions at the end of 2010, thanks to great visibility after the British government published it spending review, had continued in the early part of this year.