Provident warns of a tough year ahead

The Bradford-based group said people are being sensible and are

unwilling to take on new credit commitments.

Chief executive Peter Crook said bad debts stayed stable over the past year with the home credit division showing bad debts of 28.5 per cent of outstanding balances, up slightly from last year's 28 per cent.

Asked whether the group expected to see a pick-up in 2011, Mr Crook said it depended on who is running the country, but he wouldn't be drawn on which political party he would rather see in power after the General Election. The group posted 2009 profits at the lower end of market expectations and the group's shares fell 5.4 per cent, a fall of 52.5p to 919.5p.

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 last month, 90 staff in Bradford in the home credit division have now left the business. The 90 jobs were in the support function and no field collections or arrears management staff have been affected.

Mr Crook said he didn't see conditions improving and said 2010 would probably be similar to 2009.

"We're planning for slightly lower growth in the loan book in 2010, we'll be managing costs more tightly," he said. The group, which specialises in loans to people who usually need to borrow less than 500 and pay it back in weekly instalments, reported an adjusted pre-tax profit of 130.1m, down one per cent on last year and at the lower end of analysts' estimates.

But analysts remained positive given the group's mid to long-term growth potential. "Provident remains a good each way bet," said analysts at Numis.

The group, which raised 160m for organic growth at the end of 2009, said customer numbers grew 5.4 per cent to 2.3 million in 2009.

The company slowed the rate of new customer growth in 2009 at its Consumer Credit Division and it will maintain this stance throughout 2010 as it anticipates little change in employment conditions.