Provident’s credit card arm continues strong growth

The Bradford-based sub-prime lender said it is on course to deliver strong annual results, thanks to the expectation-busting performance of Vanquis.

Chief executive Peter Crook said: “I am pleased to report further strong growth and margins at Vanquis Bank, together with a continuing stable performance from the consumer credit division at a time when the pressure on customers’ disposable incomes from cost inflation is not abating.

“Credit quality is being reinforced by tight underwriting criteria and, as it enters its peak trading period, the group is on track to deliver good quality growth for 2012.”

Its consumer credit arm lends to households via door-to-door sales. Provident said “customer behaviour remains cautious, especially the demand for credit for more discretionary items of expenditure”.

“It is becoming apparent that the pressure on disposable incomes from continued increases in food and utility prices is not abating,” said the group.

“As a result, against unchanged tight underwriting standards, sales to existing customers have been relatively subdued during the seasonally quieter third quarter trading period.”

However, Vanquis is growing in the “underserved” non-standard credit card market. Customer numbers have grown by 26 per cent to 834,000 year-on-year. Combined with more generous credit lines, average receivables have grown by 36 per cent.

“Vanquis Bank customers are typically in more regular employment than home credit customers although the business has demonstrated that it is less sensitive to changes in the employment market than mainstream card issuers,” it said.